Tuesday 25 October 2016

Second US building project linked to Dunne and wife is put on hold

Published 30/07/2015 | 02:30

The site at 151 Milbank Avenue, Greenwich, Connecticut
The site at 151 Milbank Avenue, Greenwich, Connecticut
Gayle Killilea and Sean Dunne

A multi-million dollar building project linked to bust developer Sean Dunne and his wife Gayle Killilea has ground to a halt following a legal action in the US.

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Work on condominiums in the billionaire enclave of Greenwich, Connecticut, stopped after a bankruptcy trustee served notice that he may seek a lien on the property.

Court papers seen by the Irish Independent reveal a company, linked to the couple by a bankruptcy trustee, entered an agreement to borrow $3.5m (€3.2m) towards building the exclusive development.

According to the filings, Ms Killilea guaranteed the loan. However, her husband denies any involvement in the company or the property on Milbank Avenue. The company, 151 Milbank Avenue LLC, had been hoping to sell four condominiums for a combined sum of around $11m (€9.97m).

It is the second major building project linked to the couple which has ground to a halt in recent months. Construction has also stopped on a $22m (€19.9m) apartment building in the fashionable Soho district of New York following similar action by bankruptcy trustee Richard Coan.

Mr Coan is seeking to recover tens of millions of euro in assets he alleges Mr Dunne fraudulently transferred to his wife.

According to legal papers filed by finance company Avant Capital, it agreed to lend €3.5m to 151 Milbank Avenue LLC.

However, after Mr Coan filed a "lis pendens", a notice that a lien may be sought on the property, Avant withheld the balance of the loan which had yet to be drawn down.

As a result construction work has ceased, the lender said.

In its filing to the United States Bankruptcy Court in Bridgeport, Connecticut, Avant said the existence of the lis pendens constituted a default under the loan agreement.

The lender is now seeking a court order allowing the development to be completed and sold so that it can recover the money loaned to 151 Milbank Avenue LLC. It argued that the value of the properties may diminish as the summer ends.

The lender also said the property could end up being at risk of lawsuits from unpaid subcontractors, vandalism, and "a host of other problems that will eat away at the property's ultimate value".

It argued that allowing the project to diminish in value suited no one and would reduce "the ultimate net proceeds from the development over which the trustee and Milbank both claim ownership".

The lender said that any net sales proceeds, after the loans had been paid off, could be deposited in a segregated account pending the outcome of Mr Coan's legal action.

Avant said that if the court was unwilling to allow construction be completed and the sale of the condominiums, it would seek orders allowing it to declare a formal default on the loan and to charge interest against the bankruptcy estate.

Mr Dunne, who has debts of €700m, is currently undergoing unprecedented dual bankruptcy proceedings in both the US and Ireland. His main creditors include the State bad bank Nama, which is owed €185m.

He and his wife do not dispute that she received considerable assets from him. However, they maintain these were transferred at a time when he was fully solvent.

Legal proceedings are also taking place in New York after Mr Coan filed a lis pendens on an apartment development on Grand Street in Soho.

The development, by a company run by Ms Killilea and her stepson John Dunne, is now on hold due to a lack of finance.

Irish Independent

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