The High Court approved a supervised process for Berehaven Credit Union’s liquidators to pursue certain loan debts without seeking a separate court sanction for every case. The process applies to ordinary recovery claims in lower courts and is subject to conditions set by Mr Justice Max Barrett in a judgment delivered on 7 November 2014.
The liquidators had told the court that Berehaven had more than 380 loan accounts and that the cost of applying for approval in each case could become prohibitive. Their review found more than €3 million due on loans recorded as “written off”; the judgment explains that this label marked the start of recovery efforts, rather than confirming the debts were irrecoverable.
The court’s order allows the liquidators to act on individual case reports from M.D. O’Loughlin & Co., which are to assess prospects and recommend whether proceedings should be brought. The liquidators retain the final decision on whether to sue and are expected to consider each borrower’s circumstances, not only the legal prospects of success.
There is an important safeguard where the solicitors advise against proceedings: the liquidators cannot then bring them without specific, express court sanction. The approval covers claims for outstanding loan amounts, interest and costs, and related proceedings to enforce guarantees or security. Other kinds of action remain subject to the usual case-by-case sanction process. Proceedings that must be brought in the High Court also remain subject to prior sanction.
The liquidators must report to the court at the end of each quarter on proceedings brought under the process and how it is working. They can also seek the court’s guidance or directions at any time. The judge said the process was permitted under section 231 of the Companies Act 1963 and that its expected cost savings and oversight arrangements justified approving it, subject to the stated conditions.
The court also approved the continued employment of two Berehaven employees for as long as the liquidators consider it useful to the liquidation. The judgment does not name the employees.