Direct FX - Case Update

The liquidators of an online financial services and currency exchange business have secured the Court’s permission to not make a distribution to claimants owed less than $100, since doing so would exhaust the funds held by the liquidators.

Jason Tracy and Vaughan Strawbridge of Deloitte were appointed liquidators of Direct FX in October 2018 on the application of a client of Direct FX.

In 2020, the liquidators obtained an order permitting them to pool client moneys into a single fund for the purpose of eventually allowing them to make a rateable distribution among all clients.

Recently, the liquidators sought directions and judicial advice in relation to the distribution of the fund, which comprises moneys deposited by 2,653 individual clients of Direct FX. Of these 2,653 individual clients, only 74 have credit balances greater than $100.

The liquidators asked the Court to confirm that they would be justified in distributing the moneys to only these 74 proposed beneficiaries and nobody with a claim of less than $100. They proposed this course on the basis that the cost of distributing the moneys to all of the 2,653 clients would likely exceed the available funds because, among other things, the liquidators did not have contact details for these individuals, save for email addresses which may not be correct or current. This meant the liquidators would be required to undertake a costly and time-consuming process liaising with each individual beneficiary to make distributions which in some cases were less than a dollar.

The Court made the order sought, having regard to the the small amounts owed, the liquidators’ evidence of the steps required to make distributions and the likelihood that the costs of making the distributions would likely exceed the available sums.

Read the decision here.

Professionals involved: Christina Trahanas of Omnia Chambers and Ashurst for the liquidators.