Court order restraining house transfer continued

AN ORDER restraining the wife of former Anglo Irish Bank chief executive David Drumm from certain dealings in relation to the couple’s former family home in Co Dublin has been continued at the Commercial Court for two weeks.

Mr Justice Peter Kelly has also deferred, pending the outcome of developments in the US where Mr Drumm last month filed for voluntary bankruptcy, decisions on whether and how the action by Anglo against Mr Drumm over unpaid loans of some €8 million may proceed in the Irish courts.

The effect of Mr Drumm’s bankruptcy move has been to impose a worldwide stay on legal proceedings against Mr Drumm. The High Court here has reserved its decision whether to recognise the US proceedings via an “order in aid”.

Anglo, as Mr Drumm’s largest creditor, was seeking in the US courts yesterday to have its own nominee replace Kathleen Dwyer as the official dealing with Mr Drumm’s US bankruptcy, said Paul Sreenan SC, for Anglo.

Anglo was also awaiting the High Court decision whether to grant an “order in aid” to the US trustee, Mr Sreenan said. If such an order was granted, and the US trustee consented to orders being sought by Anglo in the proceedings, that would be of assistance.

In those and other circumstances, the judge consented to Mr Sreenan’s application to defer consideration as to what should happen to Anglo’s proceedings here against Mr and Mrs Drumm.

The judge also granted Anglo’s application to continue for another two weeks an injunction granted to the bank last month restraining Mrs Drumm from proceeding with her proposal to retransfer the Drumms’ former family home at Abington, Malahide, back into the couple’s joint names. While Mrs Drumm had offered to give an irrevocable undertaking to the same effect as the injunction, Anglo said it wanted the injunction because it provided stronger security for the bank. It added it was not casting any aspersions on Mrs Drumm.

Anglo, in its proceedings against the couple, had claimed the May 2009 transfer was “a fraud on creditors” of Mr Drumm, while the couple insisted it was for “taxation reasons”.

Despite Mrs Drumm’s agreement last month to retransfer, a final order setting aside the May 2009 transfer cannot yet be made because of Mr Drumm’s action in filing for bankruptcy as he is also a party to the transfer arrangement.

The US trustee in bankruptcy is now involved by virtue of all Mr Drumm’s assets worldwide being vested in the trustee and all legal actions involving Mr Drumm are stayed. Mrs Drumm’s agreement to retransfer has nonetheless effectively ended the proceedings by Anglo here against her but the bank’s cases against her husband remain outstanding.

A decision on liability for costs of the action against Mrs Drumm was adjourned yesterday for two weeks after Mr Justice Kelly was told the sides had made progress in talks on the costs.

The judge noted the costs issue had previously been adjourned, and added he would have believed the issue was “relatively simple”.

If no agreement was reached, he would adjudicate on costs in two weeks’ time, he said.

Mr Drumm, who resigned in December 2008 as chief executive at Anglo, is being separately pursued by Anglo for €8 million over unpaid loans but he denies liability and has counter-claimed for €2.6 million in salary, pension and deferred bonus payments.

He also wants damages, including damages for “mental distress”.