Thursday 8 December 2016

Court allows IBRC pursue Drumm over €10.4m debts

Published 27/08/2015 | 02:30

Ex-Anglo CEO David Drumm
Ex-Anglo CEO David Drumm

A court has cleared the way for the former Anglo Irish Bank to pursue David Drumm for debts of €10.4m.

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Four separate claims by the Irish Bank Resolution Corporation (IBRC) have been allowed against the bankruptcy estate of its former chief executive, who is wanted by gardaí.

However, it is unclear at this stage how much of the money owed will be recouped by the failed bank, which is now in liquidation.

IBRC is deemed an unsecured creditor in relation to all debts, bar one of just €12,200, leaving it waiting in line with other creditors to be paid.

Last month bankruptcy trustee Kathleen Dwyer asked a court for permission to allow a number of IBRC's claims.

On Tuesday, Judge Frank Bailey issued an order admitting the claims at the US Bankruptcy Court in Massachusetts, where the fugitive banker has lived since 2009.

No objection was filed by Mr Drumm or any other parties.

Most of the money owed arises from loans given by Anglo to Mr Drumm to buy shares in the bank. The shares effectively became worthless after Anglo was nationalised in January 2009.

In court papers, Ms Dwyer said that towards the end of 2007 Anglo provided loans to its senior executives to buy shares or exercise share options.

The move was calculated to provide support to the bank, which was experiencing financial and liquidity issues.

Mr Drumm purchased 500,000 shares in the bank at a cost of €3,982,500.

He had to pay €414,000 in taxes on the purchases.

A facility letter dated January 10, 2008, showed the bank loaned him €7,650,000.

The loan was deemed non-recourse and only secured against Mr Drumm's shareholding in the bank, which then stood at 850,000 shares.

However, Mr Drumm executed a new facility letter on January 28, 2009, a month after his resignation as chief executive, which made the loans recourse.

The court papers state Mr Drumm was also advanced funds by Anglo to invest in the bank's private UK Geared Bank Fund and Anglo's film financing unit.

One of the productions financed by the unit was the Colin Farrell movie 'Triage'.

Judge Bailey admitted unsecured claims of $11.3m (€9,908,400) in relation to the loan facility, $569,994 (€499,100) in relation to the Geared Bank Fund and $13,749 (€12,000) in connection with the film financing unit.

The judge also agreed to a request from the trustee for the dismissal of proceedings initiated by her on Mr Drumm's behalf in November 2010 seeking compensation from Anglo over his departure from the bank.

It was claimed at the time that Anglo breached obligations to pay Mr Drumm $3.67m (€3.2m) in severance pay, bonuses and other benefits.

That case had been effectively dormant since August 2011 when Ms Dwyer changed her position and joined forces with IBRC in seeking to deny Mr Drumm's discharge as a bankrupt.

Those moves culminated in a trial last year after which Judge Bailey refused to allow Mr Drumm walk away from his debts. The judge found Mr Drumm had failed to disclose the transfer of large sums of money to his wife and had made "false statements" and told "outright lies".

Irish Independent

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