Drumm puts counter claim against Anglo for €2.6m over lost job and loss of bonuses

FORMER ANGLO Irish Bank chief executive David Drumm is resisting the bank’s bid for summary judgment orders for some €8.3 million against him over unpaid loans and is counterclaiming for some €2.6 million over termination of his employment and loss of bonuses, the Commercial Court heard yesterday.

Mr Drumm, now living on Cape Cod in the United States, has, in letters to Anglo, claimed he has sufficient assets to meet his liabilities to the bank but that its demand for immediate repayment is premature, breaches loan agreements with him and that he is being harassed.

The bank denies those claims and also alleges Mr Drumm has so far failed to file a statement of his assets.

Mr Drumm also claims he and his wife Lorraine have given undertakings relating to their former family home in Malahide, which has been transferred into Ms Drumm’s name in what Anglo alleges is a fraud on creditors but the couple claim was for “taxation reasons”.

Anglo has brought two legal actions, one against Mr Drumm over non-payment of loans and a separate action against the couple seeking to set aside the transfer of the Malahide property.

Both sets of proceedings were transferred by Mr Justice Peter Kelly to the Commercial Court yesterday on the application of John Hennessy SC, for Anglo, and with the consent of Brian O’Moore SC, for Mr Drumm, and a solicitor acting for Ms Drumm, who is separately represented.

Both defendants have an address at Stage Neck Road, Chatham, Massachusetts, US.

Mr Justice Kelly made directions for the exchange of legal documents in both cases and fixed the bank’s application for summary judgment against Mr Drumm for hearing on January 21st next.

The case against the couple was listed for further directions on February 25th.

In the proceedings against the couple, Anglo is seeking orders to set aside their voluntary transfer for “natural love and affection” of the property at Abington, Malahide, Co Dublin – which had been jointly owned by the couple – into Ms Drumm’s sole name.

Anglo claims this property was Mr Drumm’s main asset and the transfer is void as a fraud on creditors because it would mean the property cannot be used to reduce Mr Drumm’s liability to Anglo.

The Drumms claim the transfer was “for taxation reasons” based on advice from US lawyers and was not intended or designed to protect the property from claims by creditors.

Ms Drumm’s lawyers said she was supportive of her husband trying to come to an agreement with Anglo about repayment of his loans and other matters.

They said that the couple had made no final decision about leaving Ireland on a long-term basis.

In the case against Mr Drumm, who resigned on December 19th, 2008, the claim arises from loans on dates in May 2007 and January 2009, the last being made two weeks before the bank was nationalised.

Most of the €8.3 million sum sought relates to refinancing of a facility whereby Mr Drumm could invest in shares in Anglo.

Anglo claims it lent Mr Drumm €400,000 in May 2007, repayable by May 2nd, 2008, a date that could be extended at the bank’s discretion.

It demanded repayment on September 28th last.

Under another letter of offer of January 7th, 2009, Anglo claims it agreed to renew an existing loan to Mr Drumm for a maximum €7.7 million to invest in shares and a further maximum €325,000 for a roll-up interest facility.

It claimed both facilities were subject to terms and conditions set out in the letter of offer and to a grant of security over some 886,000 shares in Anglo.

The bank says it actually holds share certificates for some 781,218 of those shares.

A fourth loan was made under an undated letter of offer sent to Mr Drumm on March 14th, 2008, for some €8,414 to invest in a film finance company. The total amount due under all four loans was some €8,341,912, the bank claims.

Yesterday, Mr O’Moore said the main defence to the claims over the loans was set out in a letter of September 30th last from Mr Drumm’s solicitors referring to the loan facility letter entered into as being agreed between Mr Drumm, Anglo’s chief operating officer Declan Quilligan and endorsed by the chairman of the bank.

That facility provided there would be no claim made under the loans until January 10th, 2010, at the earliest when there would be a review as to how the facility was to be dealt with, Mr O’Moore said.

In those circumstances, the bank’s action was absolutely premature.

Another facility had a limited recourse relating to shares in Anglo which were “very little, to put it mildly” and another of the facilities did not conform with the Consumer Credit Act.

Mr O’Moore said his client would also counter-claim for some €2.6 million arising from the termination of his employment and a bonus payment.

While this sum was considerably less than the monies claimed against Mr Drumm, it could be set off, he added.

Mr Hennessy said the bank would contend that Mr Drumm’s claims could not succeed as the loans were clearly repayable on demand served at any time at the bank’s sole discretion.