THE COMMERCIAL Court has directed the US Trustee in Bankruptcy – to whom ownership of all David Drumm’s assets has passed under US law – be asked to indicate next Tuesday whether she intends to appear in the Irish proceedings against the former Anglo Irish chief executive.
Mr Drumm is being pursued by Anglo for €8.5 million over unpaid loans. He denies liability and has counter-claimed for some €2.6 million in salary, pension and deferred bonus payments, and also wants damages, including for “mental distress”.
The action against Mr Drumm was due to open next Tuesday at the Commercial Court with the case over the transfer of his former Dublin home to be heard immediately afterwards, but the trial date was cast in doubt after Mr Drumm’s filing for voluntary bankruptcy in the US.
Mr Drumm had on October 7th last completed a course in “financial literacy”, as required under US bankruptcy law, suggesting his bankruptcy was timed to cause “maximum disruption” of the Irish proceedings, Paul Sreenan, for Anglo, said yesterday.
Counsel said the effect of the bankruptcy was to put a worldwide stay on steps by Mr Drumm’s creditors to recover assets. While normally there might not be any problem with the Irish cases proceeding, Anglo was concerned, as it has a presence in the US, not to take any step which could be seen as interfering with the US courts.
Declan McGrath, for Mr Drumm, said the Irish lawyers who had acted for Mr Drumm would be seeking to come off record. Counsel added he understood Mr Drumm had informed the US Trustee of the Irish cases, and the trustee planned to instruct lawyers but she might have had insufficient time to prepare for an appearance yesterday.
Mr Justice Peter Kelly said it was “highly unsatisfactory” that one side, through voluntarily declaring bankruptcy in another jurisdiction, could disrupt proceedings here given the “extraordinary facts”. Mr Drumm is an Irish citizen, Anglo is an Irish bank, the debt at the centre of the proceedings was incurred here and Mr Drumm’s contract was governed by Irish law.
The judge noted there is no reciprocal arrangement between here and Massachusetts in relation to bankruptcy matters but his personal experience, through acting for US Trustees when he was a barrister, was they would apply to the Irish courts to have the bankruptcy regime recognised here. No such application had been made to date.
Bearing in mind Anglo’s concern that going ahead with the case here could lead to issues for the bank in the US, the judge said he would not let the proceedings here lie in “a state of torpor”.
Fixing Tuesday for the hearing of any application by the US Trustee, the judge said, if there was no appearance by the trustee, he did not see any huge impediment to the case proceeding shortly afterwards, and the trustee should be “under no illusion” as to what was going to happen. In the interim, he would stand down next Tuesday’s hearing.
