Details of a £79 million claim relating to extended warranty service contracts sold by a UK power firm have been heard in the Douglas High Court.
Island-registered Powerhouse Insurance Ltd was placed into voluntary winding up in July 2010 and liquidators Eric Walls and Keith Steven appointed the following month.
In April 1998 PIL and another Isle of Man registered company PowerPlan Company Ltd entered into an insurance policy whereby PIL agreed to indemnify PowerPlan in relation to cashback claims arising from extended warranty service contracts sold by Scottish Power.
PowerPlan went into administration in September 2003 and Douglas MacDonald was subsequently appointed liquidator.
In March 2010 PIL entered into a deed of release with PowerPlan in which it was to pay £125,000 in full and final settlement of all past, present and future claims made in relation to the insurance policy.
But PowerPlan’s liquidator said it was induced to enter into the deed as a result of misrepresentations made by various PIL representatives and in August this year Mr MacDonald obtained an order in the Newcastle upon Tyne District Registry rescinding the deed with £125,000 being paid to the claimants. That payment has been made.
Then PowerPlan submitted a claim against PIL for £79,212,250 relating to actual individual claims received from customers who had purchased the extended cashback warranty.
PIL’s liquidators asked the high court to determine whether PowerPlan’s £79 million claim should be admitted and whether they should accept its proof of debt claim.
In his witness statement, Mr Walls said: ‘Keith Steven and I as joint liquidators of PIL have accepted the claim of PPCL in the amount of £79,212,250. The PPCL claim has been accepted subject to any guidance, ruling or order given by the court.’
But Deemster David Doyle said he did not intend to give ‘any guidance, ruling or order’ on the claim as the liquidators were ‘far better placed than this court to come to a judgment on the validity of the claim’.
He said: ‘The evidence before the court indicates that the liquidators in this case have already accepted the claim. The liquidators are misguided in their attempts to receive the court’s sanction of such a decision. No such sanction is required.’
The Deemster said he could see no good reason for converting the creditors’ voluntary liquidation into a liquidation subject to the supervision of the court.