Bankruptcy trustee fights Seán Dunne’s bid to remove him

A US bankruptcy trustee has hit back at Seán Dunne’s bid to have him removed, accusing the Irish businessman of “obstruction, recalcitrance, prevarication, lack of cooperation, outright lies and endless litigation”.

In an extraordinary legal salvo, trustee Richard Coan accused Mr Dunne of the “wholesale distortion of the facts” in a bid to oust him from handing the bankruptcy case.

The trustee has been pursuing Mr Dunne for assets ever since the property developer filed for bankruptcy with debts of €700m nine years ago in Connecticut where he was living at the time.

But last month Mr Dunne filed a motion with the US Bankruptcy Court for the District of Connecticut accusing Mr Coan of prolonging the case by vetoing a settlement with Nama and Ulster Bank, the businessman’s biggest creditors.

Referring to €8m in fees run up by the trustee, the Carlow-born businessman alleged Mr Coan was more concerned with legitimising fees and generating further income than completing a settlement.

But in a legal filing, Mr Coan hit back, indicating he had no intention of standing aside, and laying blame for the protracted nature of the bankruptcy at Mr Dunne’s door.

The trustee is currently seeking to enforce a €19.4m judgment against Mr Dunne’s ex-wife Gayle Killilea over assets fraudulently transferred to her before the bankruptcy, including €14m from the transfer of Walford, once Ireland’s most expensive home. However, the former couple have lodged separate appeals.

Mr Dunne claims that following discussions with a Nama official in February, the “dollar sum” of a settlement with Nama and Ulster Bank was agreed, only for the trustee to convince creditors to renege on the deal.

Since then, Ms Killilea has filed papers in support of her ex-husband’s motion to remove the trustee, raising questions about Mr Coan’s health and his administration of the bankruptcy.

She requested an investigation by the court and the Office of the US Trustee.

Mr Coan has insisted the motion is “wholly devoid of any basis” and claimed Mr Dunne had no standing to challenge the administration of the bankruptcy estate. He also alleged the businessman and his ex-wife had “waged a deliberate and calculated effort to prolong litigation”.

The legal exchanges leave relations between the trustee and the former couple at their lowest point since he began administering the bankruptcy estate. Both Mr Dunne and Ms Killilea deny fraudulent transfers occurred and claim the judgment in relation to Walford was down to a misunderstanding of Irish property law.

It is not yet clear when Mr Dunne’s motion for the removal of the trustee will be heard. However, both Nama and Ulster Bank have come out “without reservation” to express their support for Mr Coan.

In a legal filing, a lawyer for the creditors acknowledged Nama’s chief legal officer Alan Stewart met Mr Dunne and Ms Killilea on a “without prejudice” basis earlier this year to discuss whether a settlement was possible.

The lawyer said Mr Stewart believed in good faith that all parties ultimately would have agreed to a settlement if he had been able to negotiate one, but he was not able to do so.

The filing said Mr Stewart did not at any point state to Mr Dunne that he had authority to bind the trustee to a deal.