Friday 21 October 2016

$22m apartment plan linked to Dunne 'on hold'

Published 04/06/2015 | 02:30

Bankrupt developer Sean Dunne
Bankrupt developer Sean Dunne

A US bankruptcy official has taken legal steps which have effectively stopped the wife and son of bust developer Sean Dunne from developing a €22m (€19.8m) apartment building.

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Construction work has been halted on the project in the trendy Soho district of New York due to lack of finance, according to Mr Dunne's son John.

He claims a company run by him and his father's second wife, Gayle Killilea, is being hampered in its efforts to secure bank loans to continue the project.

This is because a "notice of pendency", a notice that a lien may be sought on the property, has been filed by Richard Coan, the trustee handling Sean Dunne's bankruptcy.

Mr Coan issued the notice in April, according to court documents. It effectively makes it impossible to sell the property or get a mortgage on it.

The trustee has alleged Sean Dunne is the true owner, an accusation denied by the Carlow-born businessman.

Now John Dunne has sought an order from the New York Supreme Court setting aside the notice.

The move is the latest twist in what has become an increasingly convoluted bankruptcy case.

In affidavits filed with the court, John Dunne described himself as the managing member of TJD21, the company which owns the site at 74 Grand Street in Manhattan.

He said his father had never held an interest in the property.


John Dunne said the company was in the process of developing the site and although construction had started, it was now on hold due to lack of finance.

He said that he was seeking a mortgage loan to continue the development, but he feared that this would be impossible due to the bankruptcy trustee's actions.

"As long as the notice of pendency is of record, it is highly improbable that any lender could be found to finance the construction and development of the property, because any mortgage would be subordinate to the notice of pendency."

Earlier this week, Mr Coan asked a bankruptcy court in Connecticut, where Sean Dunne now lives, to issue a temporary restraining order blocking the New York Supreme Court from dealing with the issue.

A decision on his application is now awaited.

According to Mr Coan, Sean Dunne "orchestrated" the purchase of the property for around $5m (€4.5m).

He alleges the property was bought using funds "fraudulently transferred" by Sean Dunne.

In filings made as part of the planning process in New York, TJD21 said it expected to make a profit of $3m (€2.7m) on the $22m (€19.8m) development by selling four apartments, once the building is completed, for between $3.3m (€2.9m) and $7.7m (€6.9m).

Sean Dunne, who has debts of close to €700m, is undergoing unprecedented dual bankruptcy procedures in both the US and Ireland.

His main creditors include the State bad bank Nama, which is owed €185m.

Irish Independent

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