Fees, costs and expenses incurred by the receiver appointed to failed Cork stockbroking firm W & R Morrogh could be as much as €5.7 million and would have to be met by selling some 35 per cent of the firm's shares, according to documents put before the High Court yesterday.

Mr Justice Murphy was also told that it was hoped those shareholders whose claims against the company were admissible would get their entitlement before December.

The receiver believed there might be 3,000 admissible claims to client cash at the completion of the receivership.

Mr Justice Murphy made orders approving payment of the costs of the receiver, Mr Tom Grace. He also made orders permitting Mr Grace to sell such shares held by Morrogh as were necessary to pay the costs, fees and expenses of the receiver.

The judge made further orders dealing with the distribution of client shares.

In an affidavit, Mr Grace said Morrogh's only assets (as distinct from client assets) were €85,000 in AIB and computers and equipment worth about €1,000.

In the circumstances, it was clear that the firm's assets would not be sufficient to discharge the level of costs incurred in the receivership.

In order to meet ongoing costs, fees and expenses of the receivership, it was necessary to sell a proportion of the shares held by the firm, Mr Grace said.

Last year, the High Court had directed that costs, fees and expenses of the receiver together with the costs of a number of identified individuals should be borne pro rata by all of the client assets of the firm.

To cover such costs, he believed that of the shares held electronically and shares held in certificated form in the name of Morrogh Nominees Ltd, it would be necessary to sell 35 per cent of such shares at current values.

In the event that contributions from the clients' assets towards the costs of the receivership exceeded the amount ultimately paid out in costs, the excess contributions would be returned to those clients at the end of the receivership.

In his affidavit, Mr Grace said the clients' assets (other than cash amounting to €7.416 million) held by the firm were valued at about €11.19 million on May 31st last. The value of claims made against the firm were about €12.5 million. He was concerned to ensure that shares held by the firm should be transferred to clients as soon as possible.

The receiver estimated that the total remuneration and expenses due to him in respect of work done by him and his assistants to the end of last May amounted to €1.9 million, with VAT of €250,000.

He estimated he would require a further €1 million to complete the receivership, together with VAT of €210,000.

The balance of the possible €5.7 million bill is understood to relate to legal costs.

Davy Stockbrokers had agreed to accept a transfer of all stock in electronic form. There were some 4,500 lawful claims by about 2,150 clients of electronically held stock. The majority of those claims were shares with a present market value of less than €1,000 and many were worth less than €100.

It would be totally uneconomic to retain these shares, Mr Grace said. He suggested that all shares with a market value of less than €500 should be sold and the cash given to the client minus any costs.

Mr Grace, who was appointed by the court in April 2001, said he had undertaken the receivership in the context of investigating the management of "a firm where there had been a systematic and deliberate fraud perpetrated by one of the two partners throughout a period commencing in 1995".

The receiver said his work had principally concerned deciding the clients' claims. It involved attempts to decide which clients were affected by the fraud and dealing with some 3,500 clients who had communicated with him.

The work also involved the preparation of detailed reconciliations spanning more than four years and covering all purchases, sales and transfers of electronically held stocks on behalf of clients, principally US-traded stocks, involving over 10,000 trades.

Apart from that work, Mr Grace said he had had meetings with the Central Bank and had given instructions to solicitors and prepared reports for court hearings.

He believed that there might be 3,000 admissible client claims to client cash at the completion of the receivership.

Mr Brian McDonald SC, for the receiver, told Mr Justice Murphy that Mr Grace was concerned shareholders should get their entitlement as soon as possible and anticipated that, in the absence of any unforeseen difficulty, they could be delivered no later than December.