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Tuesday 16 September 2014

Drumm to be grilled on bankruptcy in US court

Frank Mcgrath and Donal O’Donovan

Published 21/05/2014 | 02:30

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David Drumm is now living in the US
David Drumm is now living in the US

FORMER Anglo Irish Bank chief David Drumm will today face a public grilling at a court hearing in Boston, USA, over whether he should be allowed to emerge debt-free from bankruptcy.

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The former bank chief, who was paid more than €3m in 2007 as the then head of Anglo Irish Bank, will be the first witness in a case that is scheduled to last for five days of legal hearings at Boston's bankruptcy court.

Mr Drumm's debts include €8.5m that is owed to his former employer, the now nationalised and liquidated IBRC. The bank, and the US bankruptcy official handling Mr Drumm's case, are trying to stop him from being discharged from a Chapter 7 US bankruptcy.

While the case is not linked directly to the collapse of Anglo Irish Bank, Mr Drumm has rarely been publicly questioned about any issues arising out of the disastrous €34bn bailout of the former bank.

The five-day bankruptcy hearing in Boston looks likely to hinge on hundreds of thousands of euro in cash that Mr Drumm allegedly transferred from bank accounts held in his own name or jointly with his wife to accounts that were only in her name between the autumn of 2008 and 2010.

As well as cash, the transfers are alleged to have included stakes in homes in both Ireland and the United States.

The couple settled in the upmarket Boston suburb of Wellington after leaving Ireland back in 2009, making Mr Drumm eligible to seek bankruptcy under the American system.

US bankruptcy trustee Kathleen Dwyer and the liquidators of IBRC, the former Anglo, will claim in court that cash transfers to Mr Drumm's wife, Lorraine Drumm, defrauded creditors, including the taxpayer-owned IBRC.

Assets

They also claim that Mr Drumm attempted to conceal assets that should have been declared under US bankruptcy and that he made false statements.

In his defence, lawyers for Mr Drumm have indicated that any errors or omissions in records he provided during his bankruptcy were unintentional, while the personal strain around the time of the banking crisis meant that he felt it correct to make sure his wife was provided for at the time the transfers happened.

US bankruptcy law is generally far less severe than the rules that apply in Ireland, but failing to fully comply with bankruptcy rules can mean being forced to repay debts out of future income, even after being declared insolvent and being stripped of property and other assets.

In Mr Drumm’s case, being blocked from being discharged from bankruptcy could effectively leave him on the hook for debts even after all of his assets had been taken and liquidated.

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