THE directors of Newbridge Credit Union are objecting to an application for a further €646,000 fees being sought by the special manager appointed to the credit union and his lawyers.
The fees are sought for the period from June 2012 to January last. If approved, the 37,000 members of the credit union will have paid more than €1.3m arising from the special manager's appointment by the Central Bank last year.
In the latest fee application, special manager Luke Charleton of accountancy firm Ernst & Young is seeking some €563,000 for the costs of himself and his team while some €83,00 legal fees is being sought for his lawyers Arthur Cox.
The board and supervisory committee of the credit union are objecting to those fees, the President of the High Court, Mr Justice Nicholas Kearns, heard when the matter came before him.
The judge was told the sides had agreed the matter could be adjourned for hearing next week and he granted that adjournment.
Mr Charleton was appointed special manager last January under the Central Bank and Credit Institutions Resolution Act 2011 amid concerns about the credit union's financial position. His appointment was extended in July 2012, on consent of the directors, to mid January last. In December 2012, it was again extended to next summer.
When agreeing in December to extend the appointment, Mr Justice Kearns, in response to the directors’ concerns about what plan is being pursued for the credit union, asked Mr Charleton to deliver a report to court next April outlining what strategy is being pursued and what progress has been made.
The judge also asked Mr Charleton to consider, insofar as possible within regulatory requirements, various proposals advanced by the directors, including lowering the level of bad debt provisioning and extending time for repayment of loans.
He recognised the very difficult position of the directors in circumstances where Mr Charleton had taken over their functions and this was “not a situation that can drift on”, the judge said.
The High Court previously approved some €647,382 fees sought for some five months work by Mr Charleton to June 2012. Some €70,977 legal fees were also approved by Mr Justice Brian McGovern.
The Central Bank had agreed in January 2012 to higher rates than those approved by Mr Justice McGovern but those higher rates were cut in February 2012 by the High Court.
Mr Charleton had agreed to cap his fees at €9,500 weekly for “business as usual” work during the period from July 2012. However, that cap, also by agreement with the Central Bank, does not extend to any additional work.
Last December, the Central Bank told the court Mr Charleton had done considerable work justifying his appointment but, while the position at the Credit Union had stabilised, the conditions which required the appointment "unfortunately" continued. The Minister for Finance also supported the extension of the appointment, the court heard.
Bernard Dunleavy, for the directors, said, while not blaming the bank or Mr Charleton, the solutions they had tried to advance had "simply not worked".
The directors were concerned only one option appeared to have been pursued and they wanted Mr Charleton to at least consider their suggestions, including dealing with the situation via "a trade out", lowering the levels set for bad debt provisioning and extending time for repayment of loans, counsel said.