US bankruptcy official targets Drumm home
Anglo now has to fall in line with other creditors
Published 27/10/2010 | 05:00
A US bankruptcy official overseeing the recovery of debts owed by former Anglo CEO David Drumm has hinted that she will go after his share of the €3m family home.
She also warned that she would seek a share of any damages won by Mr Drumm, who is suing Anglo for unpaid bonuses and alleged mental distress.
Yesterday, Irish lawyers, acting for US trustee in bankruptcy Kathleen P Dwyer, told the Commercial Court in Dublin that she was taking advice as to whether to have Mr Drumm's half-interest in the family property at Abington, Malahide, Co Dublin, registered.
Mr Drumm has filed for bankruptcy in the US. By applying to have his half-share of his €3m home in Malahide, Co Dublin, registered with Ms Dwyer, it would mean that the house could be sold and Mr Drumm's share could be used to pay off his creditors.
If his wife Lorraine then co-operated with the trustee, the home could be sold and the proceeds distributed, said barrister Bernard Dunleavy, representing Ms Dywer.
Mr Drumm is being sued by Anglo for €8.5m in unpaid loans, but he has counter-claimed against the state-owned bank, arguing that Anglo owes him some €2,620,695 in salary, pension and deferred bonus payments.
The former banker, who is now resident in the US with his wife and family, also wants damages from Anglo, including for "mental distress".
Mr Drumm's counter-claim against Anglo could be considered as a "potential asset" available to his creditors, lawyers acting for his trustee in bankruptcy said.
On Monday, Ms Dwyer will apply to the bankruptcy division of the High Court to have the US bankruptcy proceedings recognised here.
Yesterday, lawyers for Anglo conceded that it would be "impossible" to proceed with two actions -- the €8.5m action against Mr Drumm and separate proceedings against Mr Drumm and his wife Lorraine, aimed at setting aside the May 2009 transfer by Mr Drumm of Abington from both names into Mrs Drumm's sole name.
This is because the unexpected October 14 voluntary bankruptcy petition filed by Mr Drumm has triggered a global stay (postponement) on all litigation.
Under the US bankruptcy code, all of Mr Drumm's assets have been vested in the trustee and there are penalties for violation of the automatic stay.
Yesterday, Anglo revealed in court that it had sought a waiver from the effects of the stay from Ms Dwyer, so that sanctions could not be imposed on it, but this request had been declined. Anglo is an unsecured creditor of Mr Drumm and must now fall in line with other creditors seeking to be repaid.
The bank said yesterday that it would be "impossible" and "inappropriate" to proceed with its actions in light of the automatic stay.
Senior counsel John Hennessy, for Anglo, said the bank did not want to jeopardise either its trading position in the US or its position as a creditor of Mr Drumm.
It urged that a temporary injunction granted last week, restraining any dealings with Abington, remain in place.
This request was granted by High Court judge Mr Justice Peter Kelly. The judge adjourned for three weeks Anglo's actions against Mr Drumm, as well as the action against the couple, aimed at setting aside the transfer.
Anglo claimed the transfer was a fraud on its creditors, whilst the couple insisted that it was for taxation reasons.