Developer Sean Dunne has lost his High Court bid to overturn his Irish bankruptcy but will separately apply next week to challenge the seizure by the Official Assignee in bankruptcy of property from a luxury house in the K Club Co Kildare.
Mr Justice Brian McGovern today ruled the Irish bankruptcy, initiated by Ulster Bank a month before Mr Dunne filed for bankruptcy in the US and adjudicated last July, was valid. Ulster Bank and the National Assets Management Agency both opposed Mr Dunne's bid to overturn his Irish bankruptcy.
The judge rejected arguments by Mr Dunne the bankruptcy should be set aside on the basis he is domiciled in the US.
The judge said he had particular regard to an email by Mr Dunne to Ulster Bank in November 2010 stating unambiguously: “My Domicile is Ireland.” Mr Dunne had not sought to resile from, clarify or explain that statement, he said.
The judge said he also had regard to other material, including an email from Mrs Gayle Dunne of December 2010 to Sotheby’s International Realty stating “. . he (Sean) spends far more time in Ireland than the US and has 200 employees and 3 hotels in Dublin, it is unbelievable that they are describing him as a refugee who ‘left Ireland’..”
The judge also rejected arguments the Official Assignee could not enter into an arrangement with the US trustee administering Mr Dunne’s bankruptcy there and said he could no “no impediment in Irish law” to such an arrangement.
Given all the facts of this case, the judge said he would also refuse an application by Mr Dunne’s counsel today for a stay restraining any further steps in the Irish bankruptcy pending an appeal to the Supreme Court. That stay application could be renewed next week when he will deal with costs issues, he said.
It was worth noting, while Mr Dunne was seeking to have the protection of the US courts arising under a Chapter 7 bankruptcy there, he and his wife were also seeking to oust the jurisdiction of the US courts in proceedings brought against them prior to that US bankruptcy in which it was alleged Mrs Dunne had received fraudulent transfers from Mr Dunne, the judge said.
The Dunnes were alleging the alleged transfers occurred in Switzerland and the US court therefore had no jurisdiction, he noted. While such a position would hardly invite comment viewed in isolation, it, when seen in the context of what was at issue in the bankruptcy hearings, “does tend to show a willingness to engage in forum shopping”.
The Irish bankruptcy proceedings were initiated by Ulster Bank in February over default on loans for some €161m issued to buy properties in Dublin. Mr Dunne (59), with an address in Connecticut, filed for bankruptcy in the US the following month when he claimed to have debts of $1bn and assets of $55m.
Following a later application by Ulster Bank, the US court appointed trustee managing Mr Dunne’s US bankruptcy ruled parallel proceedings would benefit Mr Dunne’s creditors as the vast majority of his properties are in Ireland.
Separately, Mr Dunne has initiated a legal challenge aimed at recovering documents and other material, believed to include a number of paintings, seized last week from a luxury property at the K Club by agents of the Official Assignee on foot of an order granted by the High Court.
A number of other parties also claim to have an interest in the property seized, including Mrs Gayle Dunne; an Isle of Man registered company, Traviata Ltd; and a girlfriend of John Dunne, son of Mr Dunne.
The order allowing seizure of the property was made under Section 28 of the Bankruptcy Act which allows for a search and seizure warrant to be issued where the Official Assignee has reason to believe property of a bankrupt may be located in a house or other property which may not be owned by the bankrupt themselves.
In his judgment today, Mr Justice McGovern noted it was alleged Mr Dunne has an interest in the K club property. The evidence on the issue of ownership of that property remains “somewhat vague”, the judge said.