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Monday 1 May 2017

Buyers shun Killilea firm's US properties over financial fears

Gayle Killilea of 151 Milbank. Photo: Douglas Healey
Gayle Killilea of 151 Milbank. Photo: Douglas Healey
Shane Phelan

Shane Phelan

A company run by the wife of bust Celtic Tiger developer Sean Dunne has had difficulty selling luxury homes in the US after potential buyers were put off by its financial troubles.

Gayle Killilea's business 151 Milbank LLC has been seeking to sell four luxury condominiums in Connecticut for between €2.5m and €2.8m each.

But a legal dispute over the beneficial ownership of the project gave rise to cash-flow problems, forcing it to apply for Chapter 11 bankruptcy.

"People seem to be quite put off by the bankruptcy and the fact there is no approved plan. It is making people nervous," Ms Killilea told a US court.

Chapter 11 bankruptcy is similar to examinership in Ireland, where a company can get court protection in order to restructure itself.

Details of the efforts to sell the properties were given by Ms Killilea at a previously unreported court hearing in Connecticut last November, a recording of which has been obtained by the Irish Independent.

The company was specifically set up to develop the condominiums, with Ms Killilea registered as its principal.

She later made it a trust for her four children.

However, a US bankruptcy trustee believes the project should be included in her husband's bankruptcy estate.

Richard Coan filed a notice in 2015 indicating he may seek a lien on the properties in a bid to recoup some of the €700m Mr Dunne owes to creditors.

This made it difficult for the company to secure finance needed to complete the project and it filed for Chapter 11 protection in October 2015.

The project was eventually completed but in recent months there has been wrangling over bills charged to 151 Milbank by another Killilea-controlled company, Mountbrook USA, which acted as the general contractor on the project.

The court heard an initial fee of $300,000 (€283,000) doubled to $600,000 (€566,000), due to additional overheads and delays.

Ms Killilea said she needed to sell two of the houses to pay off borrowings, with contractors next in line to be paid. The rest of the proceeds are to be placed in an account until a court adjudicates on who the beneficial owner of the project is.

The matter is just one strand of Mr Dunne's sprawling bankruptcy proceedings.

Mr Coan has claimed Ms Killilea has been acting as a property developer using money fraudulently transferred to her by her husband. The couple deny there was anything unlawful about the transfers.

Irish Independent

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