THE liquidator of Bloxham Stockbrokers has been given the go-ahead to challenge a decision to cancel Bloxham's membership of the Irish Stock Exchange which cost the firm millions.
Liquidator Kieran Wallace, of KPMG, went to court seeking permission for a legal challenge against the move – a decision he says cost Bloxham's creditors €6.25m.
Bloxham went into liquidation last year with huge debts, including €8.5m owned to National Irish Bank and more than €2m owed to the Revenue Commissioners.
Six months later, the Irish Stock Exchange cancelled Bloxham's membership of the body, potentially costing creditors €6.2m, barrister Linden McCann for the liquidator said.
That decision should be reviewed because the exchange failed to take a number of relevant considerations into account when the discretionary power to revoke Bloxhan's membership was used, according to the lawyer for Mr Wallace.
"It was unreasonable and disproportionate that the firm was not given a right to be heard before the decision was taken," the lawyer said.
The stock exchange also failed in a duty to provide an adequate reason for its decision to terminate Bloxham's membership.
The liquidator says Bloxham was in line to be paid the €6.3m when the exchange changes its rules and becomes a limited company, a move he said has been planned.
That plan is known as Project Chrysalis, the Court was told.
If the exchange demutualised it would result in a pay-out of €26.25m to its members, but that no longer includes Bloxham.
Yesterday, Mr Justice Peter Kelly at the High Court gave the liquidator the go-ahead for a judicial review.
That legal process will examine whether the right steps were taken when Bloxham's membership was revoked last year.
Bloxham itself was effectively shut down by the Central Bank last year after regulators discovered that the firm was undercapitalised.
The case is due to be heard again next Thursday.