Liquidators of second Dolphin-linked firm weigh legal action

The liquidators of a second Kildare company linked to a German property group that collapsed in 2020, resulting in losses of up to €107 million for Irish investors, are planning legal action against the failed firms' former advisers in Germany.

Hanover-based German Property Group (GPG), formerly known as Dolphin Trust, collapsed after taking €1.5 billion from investors in the Republic, the UK, Asia and elsewhere after it was set up by businessman Charles Smethurst in 2008.

Irish investments, by way of loans, were channelled to the German group through two special-purpose vehicles (SPVs) – MUT 103 and Dolphin MUT 116 – set up in Naas, Co Kildare, in 2011-2012 by Wealth Options Trustees Ltd (WOTL), of the same address. Both SPVs were put into liquidation last year.

MUT 103

It emerged last week that the liquidator of MUT 103 had filed cases in Dublin against WOTL, a linked company called Wealth Options, and the directors of WOTL, Éanna McCloskey and Brian Flynn. It is also suing the estate of a deceased WOTL director. The WOTL directors have said they will "robustly" defend all allegations against them.

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The liquidator, Myles Kirby, is also suing RE Administration, a company in liquidation that was also linked to Dolphin, and its directors, Cormac Smith and Marc Reilly, and also Lisa Marie Keane, who worked there.

Meanwhile, pension investors that channelled money into GPG projects through Dolphin MUT 116 have been told in recent days by the liquidators of that company that they are also preparing potential lawsuits.

The liquidators, Shane McCarthy and Ian Barrett of KPMG, had planned on taking a legal case late last year against unnamed German advisers to MUT 116 ahead of a claim becoming statute-barred. However, the advisers signed a waiver for six months, allowing the liquidators to continue to consider their position.

Six-month waiver

“We believe we have grounds to proceed with legal action against the former advisers,” the liquidators said in a creditor update issued this week. They have given the former advisers until May 31st to sign another six-month waiver. If this is not granted, the liquidators may take action before the end of the month.

The liquidators added that there “may be grounds to take legal proceedings against other related parties of the company in Ireland”.

“We are currently exploring this matter with McCann FitzGerald. In order for us not to prejudice the position of any potential legal proceedings we are not in a position to disclose the parties who we may take legal proceedings against,” they said.

Meanwhile, the liquidators said they may be forced to take legal action against the insolvency administrator (IA) of GPG to enforce security MUT 116 holds over certain property assets that have been put on the market by the IA. That’s if both sides do not agree to a settlement on the distribution of proceeds from the asset sales.