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Tuesday 23 September 2014

Yet another twist in tale as Drumm to learn his fate

IBRC seeks phone link to final day of bankruptcy hearing as long-running battle nears end

Published 01/06/2014 | 02:30

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David and Lorraine Drumm leave a Boston courthouse after Lorraine Drumm was called to testify in the bankruptcy trial of her husband, former Anglo Irish Bank chief executive David Drumm. Photo: Josh Reynolds
David and Lorraine Drumm leave a Boston courthouse after Lorraine Drumm was called to testify in the bankruptcy trial of her husband, former Anglo Irish Bank chief executive David Drumm. Photo: Josh Reynolds
Lorraine Drumm leaves the US court

THE Irish Bank Resolution Corporation (IBRC) has made a surprise request to be allowed to listen in by phone to the final day of former Anglo chief David Drumm's bankruptcy trial on Wednesday in Boston.

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The move is a sign of the logistical challenge facing the former bank as it tries to keep on top of the already long-running court battle after legal hearings were extended into this week.

The added time also means Mr Drumm faces an agonising additional wait for a decision on whether he can escape his debts, including those to his former employer, after the judge hearing the case extended the hearing until June 4 to hear the final legal arguments from both sides.

The case had been due to end last Wednesday. Even once all arguments have been made, Judge Frank Bailey is expected to take some weeks before delivering his verdict.

In a request made in papers filed late on Friday with the US Federal Bankruptcy court in Boston, the IBRC asked for its executive, Jamie Olden, the interim head of legacy assets at the bank, to be allowed to "appear telephonically" at the court when lawyers for Mr Drumm, and bankruptcy trustee Kathleen Dwyer and the IBRC, are due to make their closing arguments.

Mr Olden was in Boston to hear five days of witness testimony in the case, but he has since returned to Ireland, according to the filing.

The bank and bankruptcy trustee are seeking to block Mr Drumm, the former Anglo Irish Bank chief executive, being released debt-free from a Chapter 7 bankruptcy he originally filed for in October 2010.

They say Mr Drumm's discharge should be blocked on grounds including that he lied in his original filing and attempted to fraudulently transfer assets to his wife, Lorraine.

In his defence, Mr Drumm argued that errors in his paperwork were in some instances honestly made, and in others, on foot of legal advice.

At stake is as much as $2m (€1.5m) in cash and property transactions that the court could order to be "clawed back" on behalf of Mr Drumm's creditors.

If the automatic discharge from bankruptcy is blocked, Mr Drumm would also face the prospect of having to pay his historic debts out of current and future earnings.

The bulk of the debt involved is €8.5m owed to IBRC, the former Anglo Irish Bank, which Mr Drumm originally borrowed to buy now worthless shares in the bank.

However, in a separate action the bank is being sued by Mr Drumm's bankrupt estate for more than $3.6m claimed in unpaid salary and bonuses that could potentially be set against the claim.

Late on Friday, lawyers for Ms Dwyer and for IBRC also submitted a request to the court to amend their original complaints against Mr Drumm's bankruptcy discharge to formally include all of an itemised list of alleged frauds which they say Mr Drumm perpetrated.

The list had been drawn up at the request of the judge before the hearings kicked off on May 20 and was referred to extensively by both sides throughout the trial.

In her dramatic testimony last Wednesday, Lorraine Drumm said she asked her husband to begin making cash transfers to her that started in September 2008 because she feared for his life and their marriage, not to hide money from his creditors.

She outlined how as she began to worry for her and her children's financial future she a had "figure in her mind" of what would be needed for her to feel secure.

In September 2008 she opened a bank account in her own name for the first time since they had married.

After that, $1.2m in cash was transferred to Mrs Drumm from her husband's bank accounts and from their joint accounts.

She told the court: "My reason for wanting money was not about what was going on in the world, it was about what was going under my own roof.

"The marriage was going through a really tough time, the world was going through a really hard time.

"I didn't know at that time if our marriage would survive. I didn't know if he was going to drop dead of a heart attack. For the first time I could see a future without him," she added.

Mrs Drumm said the decision to buy a $2m family home in the upmarket area of Wellesley in Boston was similarly driven by Mrs Drumm's need for security and to establish roots for her family.

She said her husband wanted to rent in the US, but she insisted on buying, for no other reason than the desire for a stable, family home.

"My kids had been through enough stress leaving the country, leaving school, I just wanted them to have a home," she said.

Sunday Independent

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