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You’re out of time, says court – but liquidators reissue claims against investors.
It’s beginning to look like the liquidators are engaging in high-risk, expensive litigation where the prospects of success appear slim. Picture: Adobe Stock
UK-based investors in collapsed bitcoin scam Mirror Trading International (MTI) briefly celebrated a victory when a UK court struck out the liquidators’ claims, with costs, in their attempt to recover funds.
From the court papers it appears that the liquidators and their UK solicitors, Farrer & Co, were responsible for making the error that resulted in the strike out. Interestingly, Farrer & Co, is the same firm that represents the British royal family.
During proceedings the liquidators made it clear that the UK application was issued to ensure that the claims were not “time-barred” under SA prescription law – meaning they still had time to press their claims against the UK investors. That appears to have backfired.
Under SA prescription law, a claim of this nature expires after three years unless “interrupted” in that period, such as by the serving of summons on the debtor.
The lawyers representing the liquidators identified 9 April 2024 as the potential date for time-barring under the SA Insolvency Act. This is three years after the date they claim to have obtained the ‘back office’ database from Maxtra Technologies, the Indian software company that developed and hosted the MTI database.
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Series of errors
The UK application was issued on 9 April 2024. However, Farrer & Co only served the application on the respondents on 5 August 2024. During court proceedings it transpired that the delay in serving the application resulted in a breach of the rules governing the service of claims in insolvency proceedings.
In the UK court, it was argued by investors that the application was served out of time. The court agreed and struck out the liquidators’ claim with costs.
The UK court also rejected the liquidators’ request for an extension of time to serve the application, as such an extension would be prejudicial to the respondents due to prescription.
It also dismissed the liquidators’ request to admit the evidence of their South African counsel on the basis that he was not an independent expert.
A series of basic errors therefore appears to have been made by the liquidators and their legal team, resulting in significant costs being incurred by and awarded against the liquidators.
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Investor offer accepted – or not?
Prior to these proceedings being launched in the UK, one investor attempted to settle the matter with an offer more than six times his investment. The offer was made to Farrer & Co in March 2024.
In correspondence filed with a South African court in April 2024 the offer was reported to have been accepted by the liquidators.
However, Farrer & Co only communicated acceptance of the offer to the investor in August 2024 – by which time the likely prescription deadline had passed and the offer was no longer on the table.
Despite this, Moneyweb understands the liquidators continue to instruct Farrer & Co.
Identical proceedings (to those that were already booted by the UK court) were reissued on 8 November 2024 and served on the respondents on 19 December 2024.
A legal expert contacted by Moneyweb believes the re-issued proceedings in the UK are now highly likely to be “time-barred” by the SA Prescription Act.
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Slim chance of success
If the UK respondents registered with MTI in their own names, the liquidators’ claims should be time-barred three years after they received the back-office database from Maxtra Technologies.
In the UK court papers the liquidators clearly indicated that they had received the back office database on 9 April 2021.
Consequently, any proceedings issued after 10 April 2024 are highly likely to be out of time.
At this point it is beginning to look like the liquidators are engaging in high-risk, expensive litigation where the prospects of success appear to be very small. Are they acting in the best interest of creditors?”
Moneyweb reached out to the liquidators for comment but had not received a reply at the time of publication.
An ‘MTI Creditors Group’ is in the process of being established for concerned investors at mtiactiongroup@proton.me.
This article was republished from Moneyweb. Read the original here.
