Cantillon

Inside the world of business

Inside the world of business

Dunne’s Westbrook listed for strike-off

SEÁN DUNNE’S Mountbrook Homes, owner of some of the most expensive land to change hands during the bubble, has been listed for strike-off in the Companies Office.

The unlimited company bought the Jurys Berkeley Court site in Ballsbridge for €378 million in 2005 and the following year paid €207 million for the AIB site at Bankcentre, also in Ballsbridge.

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In December 2009, Mountbrook entered into option agreements with Zrko Ltd and Qulpic Ltd, companies associated with Ulster Bank, Rabobank and Icelandic lender Kaupthing, who all supported Dunne in his Ballsbridge venture.

Dunne is reported to have put €125 million of his own equity into the deal.

Mountbrook stands at the top of the Dunne group. It was incorporated in 1995 and had carried out extensive developments in Dublin, Wicklow, Kildare and in South Africa. Mr Dunne transferred his shareholding in Mountbrook to two Isle of Man companies in October 2008.

What a strike-off would mean for the three banks and their ability to deal with the developer is not clear.

He and his wife Gayle are now believed to be living in Connecticut, where Gayle Dunne is owner of a recently established company there, Mountbrook USA. Mr Dunne had previously been the owner of the US company.

The couple have encountered a number of difficulties on that side of the Atlantic also, with Gayle having fallen out with attorney Phillip Teplen, whom she has alleged misappropriated $500,000 she gave him as part of an investment linked to a visa application.

Marching to the beat of a distant Drumm

A JUDGE in Boston has granted David Drumm’s application that information he may disclose to his ongoing bankruptcy hearing be kept confidential.

The ruling will come as a disappointment not just to the media but to the authorities in Ireland who are investigating matters to do with the former chief executive of Anglo Irish Bank.

The judge has ordered that information that comes from Drumm, and which would be entitled to confidentiality, can be marked as confidential for the purposes of the application. The order will include answers given by Drumm to questions from lawyers for the bank.

The transcripts of his deposition can be marked confidential. Others parties involved can contest Drumm’s claim to confidentiality and, under the judge’s ruling, it is up to him to establish that the documents or information concerned should remain confidential.

All of which will no doubt provide work for a growing number of lawyers involved in the slow-moving case.

Rating agency conundrum

QUESTION: WHEN is a debt buy-back not a default? Answer: When a rating agency says so.

One of the more interesting details of the debt buy-back successfully executed by AIB yesterday is that, because it was not coercive, it was not considered a default by AIB on its bonds – and all that entails.

What is intriguing about this is what it implies about the view that rating agencies will take on the sort of sovereign debt buy-backs currently being contemplated by the European Commission as part of the solution to the debt crisis facing Greece, Ireland, Portugal and possibly others.

Various mechanisms of ever-increasing complexity have been proposed, but one of the common threads is that the buy-backs will be voluntary rather than compulsory. And thus the various rating agencies will be able to avoid characterising the event as a sovereign default.

The apparent willingness of the rating agencies to play along with this rather rose-tinted view of what is being contemplated is welcome at a pragmatic level.

On another level, it is a salutary reminder of the subjective nature of ratings and the extent to which rating agencies have been hopelessly compromised by the events of the last few years.

The European Commission would effectively be gaming the rating agencies rules, and the agencies would be happy to play along as they too have a vested interest in seeing a resolution of what, at its heart, is an existential crisis for the financial services industry.

But anyone with even a passing knowledge of what lay behind the subprime crisis would know enough to realise that thus lies the road to perdition.