Seán Dunne's adjudication as a bankrupt in Ireland marks the culmination in a five-month legal effort by one of his biggest lenders, Ulster Bank.
The court's ruling makes Dunne unique among the many former high-flying players of the boom-time property market – he is now bankrupt in two countries: Ireland, where he racked up debts of more than €700 million, and the United States, where he has lived for three years and is trying to start anew.
Last year Ulster Bank called in a personal guarantee Dunne gave on loans totalling €326 million to his building company, DCD builders.
The money was used to finance Dunne’s boldest project, the redevelopment of a large part of Ballsbridge in Dublin 4 – “sometimes referred to as an attempt to build a Dubai-esque culture in Dublin”, Ulster Bank said in a court filing in Dunne’s US bankruptcy.
Dunne was unable to pay and the bank obtained a judgment of €164 million in the Irish High Court. Ulster Bank then sought to have Dunne adjudicated a bankrupt in Ireland on February 12th, 2013.
Repeated attempts
After the lender's repeated attempts to serve legal papers on Dunne at his home in Greenwich, Connecticut, one of the wealthiest towns on the US eastern seaboard, the Co Carlow developer sought refuge from his creditors in the US courts by filing for bankruptcy in a federal court in Connecticut.
Dunne blamed Ulster Bank for forcing his hand and making him file for bankruptcy late on Good Friday (March 29th). He told The Irish Times that the bank was involved in "pure oppression and persecution".
He had not lived in Ireland for five years, he said, so it was not fair for Ulster Bank to sue him in Ireland.
The developer said that he would return to do business in Ireland again one day and that he and his wife Gayle Killilea hoped to have their three sons educated in a secondary school in Ireland.
“I look forward to the day I can pour concrete in Ireland again,” he said.
That could be some time off. The National Asset Management Agency, which has secured a judgment of €185 million against Dunne, has filed a legal complaint in the US court seeking to prevent his discharge from bankruptcy that would allow him to walk away debt-free with a fresh financial start.
If Dunne’s US bankruptcy had been uncontested, he could – under the American bankruptcy code – have been discharged by now. It could be years before he slips free of bankruptcy States-side.
Ulster Bank successfully argued before US bankruptcy judge Alan Shiff that because Dunne's creditors and properties were located outside the US, mostly in Ireland, that there should be a dual bankruptcy in Ireland and the US.
Trustee approved
Crucially, Dunne's court-appointed trustee supported the move. His own attorney noted at a hearing last month just how "unprecedented" the dual bankruptcy was for a US-based bankrupt.
Now the US trustee and the Irish court-appointed official assignee must agree a protocol on how best to liquidate Dunne’s bankruptcy estate for the benefit of his creditors.
Dunne will benefit from the new Irish personal insolvency regime, which reduces the bankruptcy period from 12 years to three, but his total discharge from bankruptcy will be determined by the slowest regime.
That is still likely to be the Irish system as it works through the new legislation.
The Celtic Tiger era’s most audacious developer has the worst of both worlds – bankrupt on either side of the Atlantic as his biggest creditors try to pour concrete on his hopes of a quick recovery.
