BACKGROUND:FitzPatrick was deemed bankrupt in an instant. To discharge takes years
HOW THE mighty have fallen. It took just seven minutes for the High Court to declare Seán FitzPatrick, the former multimillionaire chairman and chief executive of Anglo Irish Bank, bankrupt.
After some housekeeping and a little sparring between counsel for Anglo and Mr FitzPatrick over whether his proposed settlement or his bankruptcy offered the best outcome for creditors, the hearing was over in 12 minutes.
The legal bickering between counsel was academic. Mr Justice McGovern said he wasn’t going to allow the bankruptcy court to be used to “ventilate issues” between the sides. This could done in “another forum”, the judge said.
Once in charge of Ireland’s third-largest lender, worth €13 billion at its peak, Mr FitzPatrick must now disclose he is a bankrupt to borrow over €650.
Mr FitzPatrick’s financial roof began to fall in under the weight of his debts last December when his former employer, Anglo Irish Bank, sought repayment of loans – a year after he resigned as chairman over his hidden loans.
Talks followed and a “standstill” deal was agreed, allowing him to sell his interest in a potentially valuable oilfield off Nigeria, which, at an estimated €14.7 million, he claims is his most valuable asset.
On March 11th, Anglo moved, issuing a lawsuit against him. Four days later, he secured High Court protection from his creditors to devise a settlement agreement.
To secure a deal to allow him to repay some of his debts on an orderly basis over time – and avoid bankruptcy – he needed the support of 60 per cent of his creditors.
Anglo held all the cards – it had €110 million of his overall debts of €147.9 million and 85 per cent of his unsecured debt of €70 million, giving it the power to block a deal.
By seeking protection under bankruptcy law, Mr FitzPatrick fast-tracked his bankruptcy.
The court was told that Anglo was going to oppose any proposals he put forward. The bank disputed the assertion by Mr FitzPatrick that Anglo would be better-off under his proposed settlement.
Creditors were told they would receive more than twice what they would get on their unsecured liabilities under bankruptcy if they agreed to his settlement offer.
“It was clear from the outset that the scheme was never going to work,” said Anglo’s lawyer Paul Gardiner SC. Mark Sanfey SC, for Mr FitzPatrick, said his client considered he should “bow to the inevitable”. And that was that – Mr FitzPatrick was declared bankrupt.
Last Wednesday, he had a chance to put his plan to creditors.
“Clearly today is a particularly sad day for me personally and also for members of my family,” he told creditors in his solicitor’s office.
“There have been seismic happenings in the global economy over the past two years, 24 months, but I accept full responsibility for my own ruin, personal and professional, which has left me facing the real possibility of being made a bankrupt.” He expressed “deep regret” for his creditors’ losses. “Throughout my business dealings, both personal and during my time in Anglo Irish Bank, I acted at all times in good faith and I always believed I was acting properly and prudently.
“I used my best judgment in my investment decisions and in taking on loan obligations,” he said.
His main aim was to secure “a fair and equal distribution of all of my unencumbered assets to all my creditors”, he said, and that he would give full co-operation to “whatever process is chosen”.
The control of his investments and property has now been handed to the official assignee, Christopher Lehane, a court-appointed official who handles the financial affairs of bankrupts.
The scale of Mr FitzPatrick’s investments is vast and will take many years for the official assignee to untangle and sell off for the benefit of the creditors.
Mr FitzPatrick’s solicitor, William O’Grady, told creditors last week that his client’s bankruptcy would last more than seven years.
The case is listed again for July 26th, by which time further details of Mr FitzPatrick’s assets and liabilities will be provided, as he starts out on the long road to discharge himself as a bankrupt.
