Accountants estimate Quinn legal defence costs at €30m
Published 10/05/2016 | 02:30
Price WaterhouseCoopers (PwC) says it faces legal costs estimated at more than €30.1m to defend a claim for €800m brought against it over its auditing of Quinn Insurance Ltd (QIL). QIL was placed in administration in June 2010.
More than €1.2bn has so far been drawn down from the State's Insurance Compensation Fund (ICF) to meet the deficit between the firm's assets and liabilities.
In a pre-trial application, PwC expressed concern whether QIL can pay PwC's legal costs if the former insurer loses.
It wants court orders requiring QIL provide security for those costs.
QIL's financial statements for 2014 showed a balance sheet deficit of €1.21bn and QIL entirely depends on the ICF to continue as a going concern, PwC said in court documents.
ICF's support depends on decisions outside QIL's control, particularly by government and, QIL is also dependent on a High Court judge allowing it to draw down additional monies from the ICF, PwC said. In the QIL action, initiated by the administrators in 2012, it is alleged, that if then auditor PwC had identified problems with QIL's claims reserves between 2005 and 2008, it would have been apparent to QIL that its business was in "a more parlous state" than it believed. Certain actions would then have been taken by QIL and/or the financial regulator, it is claimed.
PwC was the auditor of QIL for the years ending 2005, 2006, 2007 and 2008 and the administrators have alleged breach of contract and breach of duty in its auditing.
PwC denies the claims, saying QIL directors were responsible for its management and that the company failed to provide auditors with complete and truthful information.