Saturday 19 August 2017

Drumm's wife halted in effort to transfer property

Dearbhail McDonald, Laura Noonan and Tom Molloy

ANGLO Irish Bank has secured a court order preventing the wife of former CEO David Drumm from transferring half of the couple's former family home back into his name.

The state-owned bank yesterday told the High Court it feared any efforts to put the Drumms' Malahide mansion back into both of their names could place a half-share of the property beyond Anglo's reach.

Last week, the bank was taken by surprise when Mr Drumm, who owes the bank €8.5m, filed a voluntary bankruptcy petition in the US.

The bank is also separately trying to undo a May 2009 transfer of the Drumms' home, Abingdon, from both names into the sole name of Mr Drumm's wife, Lorraine.

It told the court it feared Mrs Drumms' offer to re-transfer the house into both names would put Abingdon beyond the reach of Mr Drumm's creditors.

This is because under US bankruptcy laws, an asset acquired by a person after they have filed for bankruptcy can not be brought back into the proceedings. This would leave Anglo without a potential "claw-back" remedy.

Mr Justice Peter Kelly described the proposed settlement offer by Mrs Drumm to re-transfer Abingdon into joint ownership following its initial transfer into her sole name as akin to something from "Lanigan's Ball".

Mr Justice Kelly, who had fixed a hearing date of next week for the trial of Anglo's €8.5m debt action against Mr Drumm, granted Anglo's request for a temporary injunction.

The injunction blocks Mrs Drumm from transferring or otherwise dealing with the property.

The judge also requested that the US Trustee in Bankruptcy dealing with Mr Drumm's bankruptcy petition indicate by next week whether she intends to appear in the Irish proceedings against Mr Drumm.

He said it was "highly unsatisfactory" one side, through voluntarily declaring bankruptcy in another jurisdiction, could disrupt proceedings here.

He said this was particularly unsatisfactory given that Mr Drumm is an Irish citizen, Anglo is an Irish bank, the debt at the centre of the proceedings was incurred here and Mr Drumm's contract was governed by Irish law.

Arrangement

The judge also noted there was no reciprocal arrangement between here and Massachusetts in relation to bankruptcy matters.

However, Mr Justice Kelly, who had acted for US Trustees when he was a barrister, said it was the practice for US Trustees to apply to the Irish courts to have the bankruptcy regime recognised here. No such application had been made to date.

Acknowledging Anglo's concern that going ahead with the case here could have consequences for the bank in the US, the judge said he would not let the proceedings here lie in "a state of torpor or be sterilised".

Despite the injunction, Anglo's path to extracting value from Mr Drumm's Malahide home remains unclear.

"Now the bank has to look at that and see what can be done," one source said.

Irish Independent

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