The proposed restructuring, being advanced from late 2011 as Project Chrysalis, has yet to be effected, the court was told.
Pramit Ghose, who was managing partner of Bloxham in 2012, said he had signed the annual accounts in Apr 2012, after they had been signed off by Bloxham’s auditors, Deloitte.
The auditors had raised no issue about treating the firm’s membership of the Irish Stock Exchange Ltd (ISEL) as an asset prior to the ISEL’s proposed restucturing, which he expected to be completed by the end of 2012, he said.
He agreed with Paul Sreenan, counsel for the ISEL, that the proposed restructuring, under which €26.2m of the ISEL €45m reserves would be divided between its seven corporate members and they would also get shares in a new company to be formed to operate the exchange, had not in Apr 2012 received the necessary regulatory approval.
It was anticipated that approval would be forthcoming and no difficulties were indicated with Project Chrysalis before late May 2012 when Bloxham was directed to cease trading by the Central Bank, he said.
That suspension arose as a result of the firm’s capital position being overstated in its accounts. The partners in the firm have said they were unaware it was undercapitalised until they were told otherwise in May 2012 by Tadhg Gunnell, former head of finance and compliance with Bloxham.
Days after the firm was directed to cease trading, it petitioned for voluntary liquidation and Kieran Wallace of accountancy firm KPMG was appointed liquidator.
In High Court proceedings continuing before Mr Justice Peter Charleton, Mr Wallace wants to set aside the late 2012 decision by the ISEL revoking Bloxham’s membership of the exchange company. That decision deprived the firm’s creditors of a €6.2m asset, he claims.
Yesterday, Mr Ghose said the inclusion of the €6.2m sum in the 2012 accounts as an asset was made because it was believed the restructuring of the ISEL was imminent and that regulatory approval would be secured.
He agreed that Bloxham’s financial performance had been deteriorating over the previous years, but said that other firms were also suffering arising from the global financial crash.
He also agreed he had no evidence to support a claim in his witness statement that Project Chrysalis had been deliberately delayed so that ISEL management could ensure they would benefit from the proposed restructuring.
While he believed there was a slowdown, he had no evidence to support that belief and would agree to withdraw a claim in his witness statement alleging management deliberately delayed Project Chrysalis so they could share in “the spoils”.
The case continues.