Wednesday 18 October 2017

FitzPatrick moves another step closer to bankruptcy

Dearbhail McDonald and Joe Brennan

FORMER banker Sean FitzPatrick has moved one step closer to bankruptcy after Anglo Irish Bank told the High Court that it would block any attempt by its former chairman and CEO to reach a private deal with his personal creditors.

Yesterday, State-owned Anglo said that it would not support a scheme of arrangement proposed by Mr FitzPatrick who must submit a "final and definitive" statement of his affairs over the next few days.

Anglo Irish Bank holds some 40pc of Mr FitzPatrick's debt and, as he needs the support of three-fifths of his creditors in both number and value of debt to support his scheme of arrangement, his bid to avoid bankruptcy is likely to fail.

Securing a scheme of arrangement to repay his creditors would give Mr FitzPatrick some flexibility to deal with his assets, but if he is declared bankrupt, all property held by him will be taken over by the Official Assignee in bankruptcy for the benefit of his creditors.

The High Court may also appropriate any salary or pension to discharge his debts.

Anxious

Yesterday, lawyers for Anglo told High Court Judge Mr Justice Brian McGovern, presiding over a 50-strong bankruptcy list, that the bank was anxious to ensure that the case involving Mr FitzPatrick would not be delayed.

Senior Counsel Paul Gardiner, for the bank, sought a proof of debt hearing to iron out any disputes over the security held by the bank against Mr FitzPatrick in advance of a private sitting scheduled for July 12 next where Mr FitzPatrick will seek the support of a clear majority of his creditors. The Irish Independent has learned that the bank's determination to oppose a scheme of arrangement has been informed by a dispute over Anglo's security position in relation to loans advanced to Mr FitzPatrick to invest in an oil field in Nigeria.

Mr FitzPatrick hopes to benefit from the sale of the oil field and to reduce his loans with Anglo, but the bank has challenged his claims that the investment is unencumbered.

Yesterday, Judge McGovern said that "one way or the other", Anglo's voting rights will keep it within the threshold to carry an objection to any scheme of arrangement.

Last March the former banker successfully applied to the High Court to appoint himself an arranging debtor under the Bankruptcy Act 1988.

Arranging debtors are protected by the courts if they can devise a compelling scheme of arrangement where creditors would be repaid some or all of their debts on an orderly basis over an extended period of time.

Complicated

Yesterday, Mark Sanfey SC, representing the ex-banker, said that Mr FitzPatrick's estate was "very complicated".

Last month, Mr FitzPatrick failed in a bid to have a hearing on his personal debts held in private after Judge McGovern said he was "uneasy" about holding the hearing in private and noted that there was statutory basis for doing so.

Irish Independent

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