The Gazette 1976

GAZETTE

March 1976

SUPREME COURT UPHOLDS APPEAL BY TRUST BANK CREDITORS The Supreme Court on 26 March 1976 upheld an appeal brought on behalf of a number of creditors of the Irish Trust Bank Ltd. against a.decision of the High Court on Tuesday ordering the winding up of the Bank under the provisions of the Central Bank Act, 1971, and appointing the Official Assignee as liquidator. The Appeal Judges ordered that the Banks be wound up under the provisions of the Companies Act (as had been sought in the High Court by two sets of creditors who were separately represented) and they appointed Mr. Patrick F. Shortall as official liquidator. Mr. Justice Kenny (with whose judgment Mr. Justice Henchy and Mr. Justice Griffin agreed) said that the Central Bank, having carried out an investigation by two of its officers into the affairs of the Irish Trust Bank and having had that investigation verified by a well-known accountant, came to the conclusion that there was reason to believe that the Bank would in the near future be unable to pay the depositors and would be insolvent and, accordingly, on February 18th a direction was given by the Central Bank, which suspended the right of the Irish Trust Bank, to take deposits or make payments. Hamilton J. had been faced with a difficult situation which arose out of the fact that one group of the depositors appeared before him and argued that Mr. Shortall should be appointed official liquidator while the other group opposed Mr. Shortall's appoint- ment on the ground that he, having been involved in the investigation, could not be expected to be independent. conflict between the parties, decided that, as this conflict existed, he should make an order under the Central Bank Act and appoint the Official Assignee as liquidator. Mr. Justice Kenny said there was force in the argument that had been made that in having regard to the conflict as to who should be liquidator, the High Court judge had not dealt with the question of which manner of winding up was more in the interest of the creditors of the company, who had to be the main consideration in this matter, particularly as the accounts showed that there were deposits of approximately £4 million with this company. He said that while there were certain advantages in having the Official Assignee as liquidator there were other features which had to be considered. The Official Assignee was not a practising accountant and he and his staff had not the expertise that was re- quired in this highly complicated matter. Australian purchases It was obvious from reading the reports, he con- tinued, that there had been a number of remarkable transactions and that the funds of the Bank had been applied for the purchase of land and property in Conflict as to who should be liquidator considered Hamilton J. having been faced with this

Australia or in making loans to companies incorporated in Australia to purchase property in Queensland. This, he said, made it clear that if the Official Assignee was appointed liquidator he would have to call in a firm of accountants who were experts in this matter and who would have overseas contacts and offices which would be necessary to investigate the loans made to companies in England, Australia and other countries. Winding-up under Companies Act proper procedure Mr. Justice Kenny said that as far as the element of economy was concerned there seemed to be nothing in the appointment of the Official Assignee. Nor had the Official Assignee the .range of contacts with the com- mercial world that an accountant's office would have. It was also important to have single control in a matter such as this where the day-to-day management of the company might require speedy decisions to be made. The Court was of opinion that the fact that an accountant had reported on the affairs of the com- pany was not likely to affect his impartiality. Having regard to the fact that a winding up under the Companies Act was an established procedure whereas no winding up under the Central Bank Act had been made up to now, the Court was of the opinion that the proper order in this case was that the Company should be wound up under the Companies Act under the petition presented by the creditors. Advantage of appointing Mr. Shortall Regarding the appointment of the Official Liquidator, Mr. Justice Kenny said there were many advantages which Mr. Shortall possessed. He had made a report on the company for the Central Bank; he had acted as provisional liquidator, and had some opportunity of making himself familiar with the affairs of the bank and with the devious transactions which had been entered into in connection with the purchase of land, and the making of advances to companies outside Ireland in connection with the purchase of land. If someone other than Mr. Shortall was appointed •that person would have to do again all the work that Mr. Shortall had already done. Mr. Shortall's firm had associated offices in England and Australia and would be able to obtain information and take any steps that would be necessary through those offices. Order discharged Mr. Justice Kenny would accordingly discharge the order made by Mr. Justice Hamilton under the Central Bank Act and he would make an order that the com- pany be wound up under the Companies Act. Mr. Shortall would be appointed official liquidator. Mr. Justice Kenny said that no case had been made at the moment for the appointment of a Committee of Inspection but the order would reserve liberty to apply to the High Court for an order under section 232 of the Companies Act that the liquidator be directed to convene a meeting for the purpose of electing a Committee of Inspection. He thought that Mr. Shortall's security should be fixed at a sum of £100,000. The Court awarded the parties their costs.

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