Wednesday 13 December 2017

Court clears way for bankruptcy move against McFadden


Aodhan O'Faolain and Ray Managh

THE High Court has cleared the way for Danske Bank to proceed with its application to have financier Niall McFadden declared bankrupt.

Lawyers acting for Mr McFadden had claimed there were issues and irregularities concerning the bank's petition to the court to have their client deemed bankrupt, and had challenged the validity of the petition.

The bank opposed that challenge and argued its petition was valid.

In her judgment yesterday, Ms Justice Elizabeth Dunne held that "there was no basis" on which the bank's petition should be struck out.

Last June, Danske Bank, trading as National Irish Bank, petitioned the court to have the Boundary Capital founder declared bankrupt in respect of a debt of €8.9m.

The petition arose out of a judgment obtained by the bank against Mr McFadden in respect of that debt, and the stay on that judgment has since expired.

Mark Sanfey, SC for Mr McFadden, claimed there were a number of irregularities in respect of the bank's petition, including that it did not comply with and had ignored the rules of the superior courts.

Counsel further argued that because of the penal nature of bankruptcy proceedings all procedures must be strictly adhered to, which he claimed was not the case in this instance.

Issues were also raised concerning the jurisdiction of the High Court in Dublin to deal with the application.

This was because Mr McFadden was in possession of a temporary protection order from the UK high court that stated that "no bankruptcy petition relating to him could be presented or proceeded with" at the time when Danske Bank presented its petition to the Irish courts.


John Hennessy SC, for the bank, denied that the rules of the courts had been ignored. Counsel said that if the court found otherwise the irregularities were so minor in nature they did not preclude the bank from seeking to have Mr McFadden declared bankrupt.

Counsel also rejected the claim that the UK court order precluded his client from petitioning the Irish High Court to have Mr McFadden declared bankrupt.

In her judgment, Ms Justice Dunne said that while the bank had not complied with the rules of the superior courts, the court was satisfied to exercise its discretion and allow the bank proceed with its petition.

This was because Mr McFadden had not suffered any prejudice due to the irregularities complained of and there was no dispute to the fact that the debt is owed by Mr McFadden.

The judge also held the bank was not precluded from issuing the petition in this jurisdiction as a result of a British high court's decision to make a interim protection order.

The court noted that Mr McFadden obtained the interim order last May after Anglo Irish Banking Corporation applied to the UK high court in February seeking to have him adjudicated bankrupt in a respect of a debt of £12.85m.

That interim order, the judge added, was discharged by the UK court last July.

Following yesterday's ruling, Ms Justice Dunne adjourned proceedings.

The matter will be mentioned before the High Court in October when the new legal term commences.

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