US official seeks to drop Drumm’s claims against Anglo

The official overseeing the US bankruptcy of former Anglo Irish Bank chief executive David Drumm wants to abandon claims that he is owed $3.7 million (€3.3 million) in unpaid salary, bonuses and other benefits by the bank.

Kathleen Dwyer, Mr Drumm's bankruptcy trustee, took up the claims first made by the former banker when he and the bank were embroiled in Irish litigation over debts of more than €8 million in 2010.

The former Anglo chief listed the alleged debts due to him from the bank, now the State-owned Irish Bank Resolution Corporation, as a counterclaim against the bank's pursuit of outstanding loans from him.

He later submitted the claims as debts due to him when he filed for bankruptcy in the US in October 2010.

He had claimed in his legal dispute with the bank in Ireland that he was entitled to severance pay, bonuses and related benefits that had not been paid to him when he resigned from the bank in December 2008.

As his trustee, Ms Dwyer took over Mr Drumm’s claims as the official in charge of his bankruptcy estate.

In court records submitted in the Massachusetts bankruptcy court in Boston on Thursday, Ms Dwyer filed notice with Judge Frank Bailey that she intended to abandon the claim for the $3.7 million.

She indicated that she wants to drop another claim, also first made by Mr Drumm five years ago, that the bank had allegedly breached its duty to keep information concerning his loans confidential.

Ms Dwyer also plans to drop a claim against the bank for purported losses resulting from the nationalisation of the bank in 2009, which wiped out the value of Anglo shares Mr Drumm held. Those shares were security for most of the €8 million in debts he owned to the now defunct lender.

She also signalled to the court that she plans to drop Mr Drumm's claim against the bank and insurer AIG under a director and officer insurance policy protecting him.

“The trustee will deem the estate’s interest in the foregoing claims abandoned unless a creditor or other party in interest files a written objection to the proposed abandoned,” Ms Dwyer’s lawyers wrote.

Any objectors have 14 days to try and prevent her from abandoning Mr Drumm’s claims.

The move would end the former bank chief executive’s attempts to reduce his debts substantially, though Ms Dwyer would have had to prove that his counter-claims were legitimate.

Ms Dwyer testified last year during his bankruptcy trial that she believed Mr Drumm was owed money by the bank, though she added that she had not focused on the claims “for quite a while.”

“I haven’t given it a lot of thought,” she said in May 2014 during a court hearing.

In January Judge Bailey refused to grant Mr Drumm a discharge from his debts in a damning court ruling following his trial. Had Mr Drumm won the case, he would have secured a fresh financial start, free of debts.

Instead the judge found Mr Drumm (48) knowingly and fraudulently failed to disclose hundreds of thousands of dollars and euro in cash transfers to his wife in the lead-up to his bankruptcy.

His statements to the court were “replete with knowingly false statements, failures to disclose, efforts to misdirect and outright lies,” the judge said in his ruling, which Mr Drumm is appealing.

As a result of the ruling, without the protection of the bankruptcy court, his creditors are free to pursue for his debts from any income or assets he holds.

Last month the Massachusetts bankruptcy court permitted IBRC to pursue four claims against him to recover its multimillion euro debts.

A Massachusetts District Court Judge is still considering Mr Drumm’s grounds for appeal.