Dunne firm seeks $5m to finish houses
Published 19/01/2016 | 02:30
A company managed by bust developer Sean Dunne is expected to be given court approval to borrow $5m (€4.6m) to complete a condominium development in the US.
Mr Dunne's bankruptcy trustee has agreed to the move, subject to certain conditions.
It will allow the Dunne- managed firm, 151 Milbank LLC, complete an $11m (€10.1m) development in the millionaire's enclave of Greenwich, Connecticut.
The ownership of the company has been a matter of dispute since last year.
Records show Mr Dunne's wife, Gayle Killilea, is registered as the company's principal.
However, bankruptcy trustee Richard Coan believes the project and the property should be included in Mr Dunne's bankruptcy estate.
The Carlow-born developer has denied he is the owner, but accepts he is involved in the management and operation of the business and property.
Under the deal, the borrowed cash is to be used to complete the building works and to pay off other lenders and contractors owed money on the project.
Once the condominiums are completed and sold, the proceeds left over are to be put in a special bank account until the issue of the property's current beneficial ownership is adjudicated on by the courts.
According to court papers, work on the property ground to a halt last April, when Mr Coan filed a notice indicating he may seek a lien on the property as part of his efforts to recoup some of the €700m owed by Mr Dunne to creditors.
The notice, known as a "lis pendens", caused a situation where the company could not borrow any more money to complete the development.
However, following months of wrangling, Mr Coan has agreed to allow the firm borrow up to $5m to complete the work.
A deal has been put in place to borrow the cash from Maxim Credit Group, a New York-based lender.
A motion agreed by all sides in the dispute reads: "It is in the best interests of the debtor and its estate and all other parties in interest that the development of the property is completed in that this will maximise the value of the debtor's assets."
The agreement is to be put before a judge in New Haven, Connecticut for approval next week.
It includes an agreed budget for work to be done to complete the project.
A third party project manager will also have to be appointed as part of the conditions of the deal. This project manager will have to make weekly conference calls to update the trustee and Mr Dunne's creditors of progress with the construction.
Mr Dunne will not be allowed to issue any cheques or make any payments of the loan money without express written consent of the project manager.
He is also barred from selling any of the condominiums to an associate.
The dispute over the project is just one strand of sprawling bankruptcy proceedings involving Mr Dunne in the US, Ireland and South Africa.
A key point of dispute is that Mr Coan alleges Mr Dunne is using companies registered in his wife's name to conduct business.
Companies run by Ms Killilea have been involved in several property development schemes in the US in recent years.
Mr Coan also claims Mr Dunne fraudulently transferred tens of millions of euro to his wife.
The allegations are disputed by the Dunnes, who say any transfers made were lawful and done at a time when he was solvent.
Mr Dunne filed for bankruptcy in the US in March 2013 having moved there three years earlier.