Banks are set to move against five investment properties in Europe controlled by Custom House Capital (CHC), the failed Dublin firm. Another five properties are at risk of foreclosure.
The lenders are expected to seek repossession within weeks, wiping out the value of investments made by Custom House clients in the five syndicates most at risk. The collapsed firm, which invested heavily in Germany and neighbouring countries, controlled more than 100 property partnerships before being put in liquidation in October.
Banks continue to support most of its other property deals, even though their lending covenants were breached when CHC went into liquidation.
Inspectors appointed by the High Court in October found a €66m shortfall in client funds, although the black hole has since increased to €90m.
Separately, problems emerged last week on how the liquidators’ fees and bills are to be paid. At present the liquidation is not generating sufficient income.
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Horwath Bastow Charleton, the accountancy firm, is managing clients’ assets under an agreement with the liquidator, Kieran Wallace of KPMG.
The agreement terms, revealed to the High Court last week, give the liquidator 25% of the management fees generated by the client assets, with Bastow Charleton receiving the balance.
No management fees have been paid since July, however, when the Central Bank froze all client funds under the direct control of Custom House.
Property deals, structured under special purpose vehicles (SPVs), are excluded from the freeze, although less than half of them pay management fees because of restrictions imposed on the SPVs by their banks.