Problems arose for oldest stockbrokers when capital was overstated by €5m
THE partners in Bloxham Stockbrokers admitted yesterday that the firm was insolvent, unable to pay its debts and had liabilities of €13.9m.
At a High Court hearing in Dublin they agreed the firm should be wound up and admitted they faced significant claims.
Lawyers acting for the failed stockbroker said problems arose when regulatory capital was overstated by €5m. The firm also recorded a tax liability of €1.3m as an asset rather than a liability while a pre-payment of €1m to the taxman in April 2011 and repayments of loans to directors of €1.7m were never recorded as having being paid out.
The court was told yesterday the partners saw "no prospect of an improvement in Bloxham's trading position". Its largest creditors include National Irish Bank, which is owed €8.5m, and the Revenue Commissioners, which is owed €2.3m.
A court case currently before the courts in London could add to Bloxham's problems if the court there finds against what was Ireland's oldest stockbrokers until it failed late last month.
Bloxham called on clients who may have lost money following the firm's failure to contact the official liquidator who was appointed yesterday.
While people were urged to make contact, there almost certainly won't be any losses for clients, the Central Bank said following the appointment of Kieran Wallace as official liquidator.
Bloxham's clients will now get a letter asking whether they are due compensation. The law states that investors can receive a maximum of €20,000 when an investment firm goes bust.
Bloxham collapsed in late May but client funds were untouched by the problems that led to the firm's closure.
Davy had already agreed to buy the private client business but also acquired the asset management business following the collapse for almost nothing.
Several staff members and some of Bloxham's 17,000 private clients have since moved to Goodbody Stockbrokers and Dolmen since the original deal was struck. Davy has retained the bulk of the assets but some staff and private clients defected to Goodbody and Dolmen, sources say.
Bloxham's bond desk has, meanwhile, moved to Merrion Stockbrokers where they are expected to begin trading once a new system is put in place in a few weeks' time. Bloxham economist Alan McQuaid has also moved to Merrion.
Dolmen, which has been repeatedly linked to some sort of tie-in with US brokerage Cantor FitzGerald, has also been active when it comes to recruiting former Bloxham staff, sources say. Dolmen's mooted deal with Cantor has made the broker attractive to many staff, including at least one former Bloxham partner, they add.
The wind-up of Bloxham will be overseen by the Central Bank-controlled Investor Compensation Company, which is also looking after the collapse of Custom House Capital.
The eight staff at the Investor Compensation Company are paid from funds levied on financial services companies.