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Clark Hill Represents Petitioner in Successful Application to the High Court to Wind Up Irish Arm of Failed German Property Group

March 11, 2021

The High Court has appointed a liquidator to M.U.T.103 Limited (“the Company”), one of two companies incorporated in Ireland to facilitate investments in an entity called German Property Group GmbH (formerly Dolphin Capital GmbH and Dolphin Trust GmbH). Clark Hill, instructed by the Petitioner, issued the Petition seeking an Order that the Company be wound up pursuant to section 569 (1) (d) of the Companies Act 2014.

On Wednesday morning, Mr. Justice O’Moore determined that there was no credible case made by the Company for dismissing the Petition and that neither justice nor fairness required that the Petition be adjourned.


German Property Group GmbH (“GPG”) was incorporated in Germany by German-British businessman, Charles Smethurst. It operated an investment scheme whereby it raised funds from investors to develop and renovate listed buildings in Germany and promised high-interest payments in return. It is believed that more than €1 billion was invested in GPG from investors primarily located in Ireland, the UK, France, Russia, South Korea, and Singapore. Approximately €150 million was invested by Irish Investors with approximately €107 million in capital sums outstanding to Irish investors (some of which has not yet fallen due for repayment).

Irish investors, through a network of brokers, each invested a capital sum with the Company for a term of either three or five years, in return for a secured loan note certificate offering bi-annual interest coupon payments or, alternatively, rolled up interest that would be repayable to the investor on the expiry of the three- or five-year term along with their initial capital sum. Investor’s funds were then lent by the Company to the GPG Group pursuant to intragroup lending arrangements between the Company and GPG, its sole shareholder at the time. Under the terms of the investment, GPG was to grant the Company with a first ranking legal land charge over properties owned by GPG in Germany as security for the investor funds advanced by the Company to GPG.

Wealth Options Trustees Limited (“WOTL”) acted as administrator and security trustee since 2011. During this time, a number of the directors of WOTL were also directors of the Company, along with the founder of GPG, Charles Smethurst.

The Petitioner, an elderly woman, invested in a three-year loan note instrument created by the Company. The repayment date of the capital sum invested by the Petitioner, together with the final interest coupon, was 2 February 2020.

In November 2019, the Company began to miss making coupon interest payments and capital repayments to Irish investors. Despite assurances that payments would be forthcoming, no payments were made to Irish investors since November 2019. GPG later filed for insolvency in Germany in July 2020 and has been the subject of much global media attention. Links to some of the global media coverage can be found here:

BBC News

The Times

Nikkei Asia

Business Insider (Germany)

In default of repayment, the Petitioner, through her son, engaged in extensive communications with the Company and its administrator, WOTL, in which she raised multiple concerns in relation to, inter alia, the security held by the Company and the structure between the Company and GPG. The communications also requested payment of the debt due and owing.

In the absence of a satisfactory reply from the Company or WOTL, the Petitioner instructed Clark Hill, and a letter of demand was served upon the Company at its registered address on 24 November 2020. Following a brief exchange of correspondence with the solicitors for the Company, the Petition was issued on 18 December 2020 seeking an Order that the Company be wound up pursuant to section 569 (1)(d) of the Companies Act 2014 on the grounds that the Company was unable to pay its debts.


The Company did not contest that it was unable to pay its debts and specifically that it was unable to pay the monies due and owing to the Petitioner. Instead, the Company requested that the Court exercise its discretion under section 572 of the Companies Act 2014, to dismiss or adjourn the Petition to afford WOTL, as administrator of the Company, more time to, inter alia, identify the status of the security and to canvass the views of the other investors over the course of 50 meetings.

The Court was informed that WOTL had engaged several experts over the past twelve months to review the status of the security and the options available to Irish investors. Counsel for the Company told the Court that the investigations were awaiting finalisation and in addressing the delay described the insolvency of GPG as a convoluted process.

It was argued that no prejudice would be suffered by the Petitioner if a lengthy adjournment was granted in circumstances where the Company was not trading or incurring debts. The Company submitted that in Re. Goode Concrete [2012] IEHC 439, the fact that a company had ceased trading was a relevant factor to be considered by the Court in deciding whether to adjourn a petition.

Counsel on behalf of the Petitioner contended that it was a well-established principle that a creditor who is owed a debt by a company is entitled ex debito justitae to an order winding up that company. While there are a number of exceptions to this rule, the Court should only exercise its discretion to refuse to make a winding up order “…sparingly and where good cause is shown” as held by Laffoy J. in Re Burren Springs Limited [2011] IEHC 480.

It was submitted that while consideration can be given to the views of other creditors, where they are known and expressed – and in the evidence that was before the Court, they were neither known nor expressed – it remains the case that a petitioning creditor is entitled ex debito justitiae to an order winding up that company. It was further maintained that the views of the other creditors, insofar as they are known, are not dominant over and above the rights of the petitioning creditor.

Counsel for the Petitioner noted that the Company was seeking to rely on Re. Decobake Limited [2019] IECA 169, and in particular section 566 of the Companies Act 2014, in contending that a Court could have regard to the interests and wishes of other creditors in the making of a winding up order. Notwithstanding the fact that there was no evidence before the Court as to what those interests of other creditors might be, counsel for the Petitioner highlighted to the Court that in Re. Decobake Limited, the Court of Appeal, in dismissing the company’s appeal of the winding up order, stated that section 566 of the Act is “permissive and not mandatory”.

The Court also heard how the Petitioner had made a number of requests for meetings of the Irish noteholders to be called, and despite a number of promises by the Company that meetings would be convened, none of these promises came to pass. Counsel for the Petitioner said that these were the same meetings now canvassed by the Company and WOTL in seeking the benefit of further time to put unidentified proposals to other investors, which may potentially be to their benefit.

The Court was told that a liquidator, appointed by the Court, was the most appropriate individual to take up the running of the Company, where it was grossly insolvent, had no hope of regaining solvency, and where the experts engaged by the Company and its administrator over a period of twelve months were still not in a position to shed any light in relation to the security allegedly held.


Following the hearing of the Petition on 1 March 2021, the Court on Wednesday morning, 10 March 2021, appointed Myles Kirby, of Kirby Healy Chartered Accountants, as liquidator to the Company.

The Judgment delivered by the Court remarked that the loss of confidence on the part of the Petitioning Creditor in WOTL’s ability to administer the debts of the Company was an important factor.

The Judgment observed that there was a stark contrast on the security position as described to brokers by WOTL and the evidence that was before the Court. The Court said that whilst it was not the basis for its Judgment, a consideration which supported the view that was ultimately reached were the continuous assurances given by WOTL that the monies advanced by the Company to Germany were fully secured. The Court noted that from the evidence that was before it, the status of the security was far from certain.

In delivering its Judgment the Court announced that it would be preferrable that the Company now come under the stewardship of a liquidator supervised by the Court for the purpose of enforcing any security and seeing off any challenge to that security that might arise.

O’Moore J. noted that even though profoundly worrying allegations had been made about GPG since July 2019, efforts of the Company and WOTL appear to have achieved little or no culpable benefits for the Irish investors in the intervening period.

In reaching its decision the Court recognised that WOTL had refused to deal with individual queries from investors for a number of months and instead communicated sporadic updates to brokers. The Court commented that it would have been helpful if the Company had engaged more proactively with the investors to whom it owes large amounts of money to, and further said that it found it ironic that the Company was now requesting that the Petition be dismissed or adjourned precisely to allow meetings of investors to be convened which had previously been canvassed by the Petitioner.

In Summary, the Court found that there was no “good cause” shown by the Company for dismissing the Petition. It held that to do so would allow the Company, which is plainly insolvent, to continue in being and would allow the current unsatisfactory situation to persist indefinitely.

The Court held that neither justice nor fairness required that the Petition be adjourned to allow the Company and WOTL to convene meetings of the investors. It noted that to do so would allow the current directors of the Company to remain in control and to run the proposed meetings. The Court held that it saw no reason why the liquidator could not adhere to this task and that there was no evidence before it that suggested the directors would have any advantage over the liquidator in holding these meetings or in seeking to enforce the Company’s security.

A copy of the Judgment in its entirety can be accessed here.

If investors have any queries in relation to the liquidation process, or the appointment of Mr. Kirby as liquidator to the Company, please contact Ray Kelliher or Jennifer Fay at Clark Hill Solicitors LLP.

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