Budgeting firm put clients' cash in 12 properties
Liquidators appointed to Home Payments after AIB queried the use of company funds
A household budgeting company which has collapsed owing its customers more then €6m bought 12 properties as investments in a 10-year period.
Provisional liquidators were appointed last Friday to Home Payments of Rathgar, Dublin -- which has €2m in its bank account -- after AIB had raised concerns about the use of funds in the company which were invested in property.
The 2,300 customers of the company are owed amounts ranging from e1,500 to e10,000. The firm bought 12 properties as investments between 1996 and 2006. Most of them have mortgages with AIB, and include houses and apartments, mainly around Dublin.
These include properties in Rathgar, Terenure, Sir John Rogerson's Quay, North Circular Road, Capel Street, Smithfield, James's Street, Tallaght, and Wexford.
A statement on its website said: "Home Payments Ltd made investments in the property sector. The decline in values in this sector has had a significant negative impact on the value of those investments. The company has been in discussions with its lenders to restructure its repayments."
The High Court was told that Home Payments said AIB may have a valid fixed charge over a number of investment properties it acquired.
The court heard that in recent weeks AIB had sought a review of the home payments business as the bank had concerns over deposits and credit balances in the firm's accounts and the use of funds for investments.
The company, which was set up in the 1960s to help people pay household bills, said it was surprised at the bank raising such issues as it had operated its business in the same manner for 17 years with the full knowledge of the bank.
Home Payments said it maintained its liquidity in the same manner as it always had, which was reflected in its audited accounts.
However, after AIB expressed its concerns, the company got legal advice that the use of customer funds to make investments may have been beyond the firm's legal powers -- and that therefore the validity of security given by the company to the bank may be in doubt.
The company directors, Eamon and Conor O'Connor and Niamh Ryan, said on their website that "the decision to have to cease operating late Tuesday afternoon was unexpected".
"Once the decision was taken, all methods of receiving payments from our customers into our accounts were immediately stopped by ourselves including direct debits, debit cards and cheques received that day which were not lodged.
"All collection staff were immediately instructed not to collect any money from customers.
"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 those very same families."
However, the High Court confirmed the appointment of provisional liquidators to Home Payments.
Mr Justice Garrett Sheehan approved chartered accountants Eamonn Richardson of KPMG and Eamon Leahy of Leahy and Company as joint provisional liquidators because the firm, which has 2,300 customers, was insolvent and unable to pay its debts.
The court heard that more than 1,500 customers are owed less than €3,000; around 700 are owed between €3,000 and €10,000; while some 23 customers are owed more than €10,000.
Meanwhile, the liquidators said customers would be individually contacted over the coming days "who will assess and reconcile any funds owed to them by Home Payments Limited".
The National Consumer Agency has also set up a working group with the Money Advice and Budgeting Service (MABS), the Central Bank, the Irish Banking Federation, and other industry bodies to protect affected customers from falling into arrears and bad credit ratings.