High Court judge says professionals "feasting on carcasses" of insolvent companies
A HIGH Court judge has expressed concerns about various professionals "feasting on the carcasses" of insolvent and semi-solvent companies at a time when many sectors are "taking a hit" and many people have had pay reductions.
Some professionals appeared to be getting good pickings from troubled sectors when other people who are working just as hard are getting less, Mr Justice Brian McGovern said.
He made the comments today after approving "a very large figure" of €509,543 fees, plus outlay and VAT making a total of €647,382, sought by accountant Luke Charleton of Ernst & Young, for five months work he has done since being appointed last January as special manager to Newbridge Credit Union, Kildare.
Some €70,977 legal fees were also approved.
The fees cover the period January 13 to June 14, 2012.
As Mr Charleton's appointment was previously extended for another six months to the end of this year, a separate application for fees for that period will be made later.
The fees will be paid by the 37,000 members of the credit union whose representatives said yesterday they could not consent to such a large sum but were not opposing it.
The fees are based on hourly rates descending from €375 an hour at partner level.
The level of fees, the court heard, was agreed to by the Central Bank whose counsel Brian Kennedy described Mr Charleton's work as necessary, proportionate and of a high professional standard.
Mr Kennedy also noted the Bank had agreed to rates last January which were higher than sought now but those higher rates had been cut in February by the High Court.
Rossa Fanning, for Mr Charleton, said his client's work was "very significant, complex and novel" and he was the first special manager appointed under new legislation entitling the Central Bank to make such appointments when considered necessary.
The appointment was sought by the Central Bank with approval of the Minister for Finance arising from uncertainty about the credit union's financial position.
Mr Justice McGovern said he was told the work done was complex but he wondered was it more complex than a very difficult liquidaiton or examinership.
Having heard the sides, the judge said he would approve the fees. While he saw "a very large figure", the Central Bank said this work was necessary and professional done, it was in a better position to judge and the members were also not opposing the fees.
He would make the order but had general concerns in a context where many sectors are taking a hit but insolvency and other professionals were feasting on the carcasses of troubled companies, the judge said.
Mr Charleton's appointment was sought in circumstances where there was said to be a lack of clarity about rhe financial position of the credit union.
In an affidavit, Mr Charleton said a very considerable amount has been achieved with regard to identifying issues that need to be addressed to ensure the viability of the business of the credit union.
Most of the work completed by his team was done at senior level and he believed all members of his staff had properly engaged in the work assigned to them.
Bernard Dunleavy, for the Supervisory Committee of the Credit Union representing the members, said they would have to bear the costs of the special manager and could not consent to what they considered to be "very large" fees.
Mr Dunleavy said the members recognised Mr Charleton had done significant work and the Committee had filed affidavits in this matter but he would not open them as they contained confidential information related to the credit union.
The members had drawn the manager's attention to matters that might assist in reducing his team's costs, he added.
Mr Dunleavy said Mr Charleton's appointment had been extended for another six months but the members hoped that represented "an outside date" rather than a target date and the appointment could be concluded as soon as possible with a view to having the fees capped.
Mr Fanning noted higher fee rates agreed between Mr Charleton and the Central Bank last January had been reduced in February by the High Court and the fees for which approval was sought were based on the adjusted rates.
The court heard the hourly rate sought last January was "considerably larger" than the norm but Mr Fanning said there were special circumstances in January as this was a novel and complex assignment, the first under the Central Bank and Credit Institutions (Resolution) Act 2011.
Mr Charleton had some 20 staff in the credit union for the first month but that number had tapered off significantly after January. The basic fees had already been approved and "embedded" by previous court orders, counsel added.