Sean Dunne’s two biggest creditors and the US court official investigating his financial affairs have objected to the insolvent property developer’s application to withdraw his US bankruptcy case.
At a hearing in a Connecticut court, a lawyer for Mr Dunne's bankruptcy trustee Richard Coan said he would be seeking to block the developer's request to end his bid to walk away from $942 million (€700 million) in debts through a discharge from bankruptcy in the US.
Lawyers for the National Asset Management Agency and Ulster Bank, which are owed hundreds of millions of euro, told the court that they also objected to his US bankruptcy case being dismissed.
The court heard Mr Dunne's trustee, the court official charged with overseeing his bankruptcy, is strongly considering taking further actions to recover tens millions of euro of assets transferred by the Co Carlow-born developer to his wife Gayle Killilea Dunne, the former newspaper gossip columnist.
Transfer of €40m
Timothy Miltenberger
, for Mr Coan, told Judge
Alan Shiff
that Mr Dunne had voluntarily filed for bankruptcy in the US and owed hundreds of millions of euro to creditors. He said that the developer had admitted transferring more than €40 million to his wife and has said that he wished he could have transferred more to her.
The trustee has evidence that Mr Dunne had “complete dominative control” over the assets of his wife, said Mr Miltenberger.
Ms Killilea Dunne still had not fulfilled an order in the bankruptcy proceedings to disclose information to Mr Coan, he said, and document requests were still outstanding in the proceedings.
Dismissing the case at this stage “would not be in the best interests of creditors,” Mr Miltenberger told the judge.
The trustee was “actively investigating” Mr Dunne’s asset transfers to his wife and “strongly considering” whether to take actions to recover assets for Mr Dunne’s bankruptcy estate and his creditors, he said.
“Sometimes you walk into federal court, you don’t have the right to walk back out,” the trustee’s lawyer told the court.
Eric Henzy, an attorney for Ms Killilea Dunne, rejected the allegation that Mr Dunne's controlled her assets and argued she should be allowed to participate in any hearing to determine whether her husband should be allowed to have his case dismissed.
Property crash
Mr Dunne filed for bankruptcy in the US, where he now lives, in March last year after the Irish property crash left him insolvent. He was made bankrupt four months later in the
Irish High Court
following a legal action taken by Ulster Bank over a debt judgment of €164 million. Nama secured a judgment of €185 million against him in
Ireland
.
The developer told the court through his lawyer last week he was no longer seeking a discharge from his debts in the US and requested that his Chapter 7 bankruptcy case be dismissed. He said that he did not have the resources to defend Nama’s objection to his being discharged.
The judge gave Mr Dunne’s lawyers until September 5th to file a pre-trial order setting out his arguments for the dismissal of his case and until September 12th for trustee and creditors to respond to those arguments.
The judge told Ms Killilea Dunne’s lawyer she had a relationship with the debtor but had “no standing” in this case and he had to file a motion by September 5th stating why she should be heard on this issue.
The matter will come before the court again on September 23rd when the judge will decide whether to dismiss Mr Dunne’s case or if the matter should be decided at trial.
