Householders 'unlikely' to get money back from billing firm
THOUSANDS of householders -- owed up to €10,000 each following the collapse of a household budgeting company -- are unlikely to get their money back.
Around 2,300 customers are owed more than €6m in total by Home Payments, the High Court heard yesterday.
The amounts owed range from under €1,500 to €10,000
Mr Justice Garrett Sheehan appointed provisional liquidators Eamonn Richardson of KPMG and Eamon Leahy of Leahy and Company to Home Payments Ltd of 18 Rathgar Road, Dublin 6, which ceased trading on Tuesday, as it was insolvent and unable to pay its debts.
The firm offered customers a bill payment service where it collected money on a fortnightly or monthly basis, and then took responsibility for payment of household bills such as utilities, insurance and mortgages.
The liquidators said they had taken immediate control of the company to secure all its assets, records and bank accounts and will contact all customers individually over coming days to assess and reconcile what is owed to them.
The company directors sought the appointment of liquidators saying it was in the best interests of their customers and creditors that the firm was wound up and no creditor got priority over another.
Home Payments has 16 employees, and 2,300 customers. More than 1,500 of these customers are owed under €3,000, another 700 are owed between €3,000 and €10,000 and 23 are owed over €10,000.
The firm also said that the AIB may have a valid fixed charge over a number of investment properties it had acquired.
AIB had sought a review of Home Payments' business in recent weeks amid concerns over the use of customer funds for investments. The company had then obtained legal advice that this use of funds may have been beyond its legal powers, and therefore the security provided to the bank might be in doubt, the court was told.
Company accounts for 2010 showed they had net assets of €2.8m, but their creditors were owed more than €7m within 12 months and more than €2m after that.
The National Consumer Agency (NCA) came under strong attack from disgruntled customers yesterday accusing it of failing to take action earlier to protect householders.
NCA chief executive Ann Fitzgerald said the agency had raised concerns with the Department of Finance and the Central Bank over the lack of regulation of debt management companies -- but this type of company handling regular payment of household bills that were not in arrears had been "totally under the radar".
"It has shown up an area none of us really knew existed," she said on RTE radio.
Ms Fitzgerald said it had learnt of the company's situation on Wednesday evening and had moved to clarify the set-up, before issuing a warning to customers to cancel direct debits to Home Payments on Thursday afternoon. She conceded it was "highly unlikely" customers would get money back.
However, the NCA had now set up a working group with the Money Advice and Budgeting Service, the Central Bank, the Irish Banking Federation and other industry bodies to protect affected customers from falling into arrears and bad credit ratings.
"The NCA is also calling for urgent regulation of this sector, so that clients' funds are legally required to be ringfenced and therefore protected in cases where a company ceases trading," Ms Fitzgerald said.
The Office of the Director of Corporate Enforcement said it would receive a report from the liquidators within six months and could take action if there were any breaches of company law within their remit.
However, a legal source said it would not be a criminal breach of company law for a company to exceed its powers by investing customer funds.
In a statement on its website directors Eamonn O'Connor, Conor O'Connor and Niamh Ryan apologised to customers, staff and friends.
They said the decision to cease operating late on Tuesday was unexpected, and they had immediately stopped all methods of collecting payments including direct debits, debit cards and cheques received that day.
"Given the nature of the service that we have provided to so many families over the last 48 years we sincerely apologise for the stress caused to these very same families," they said.
The liquidators have set up a customer helpline at 01 4975795 and can also be contacted at firstname.lastname@example.org.