Wednesday 26 June 2019

Dunne might wish he'd played ball with his creditors from the start

Stock image
Stock image

Dan White

Sean Dunne's financial problems can be traced back to his decision to pay a total of €380m for the former Jurys and Berkeley Court Hotels in Ballsbridge in 2005. Most of the purchase price was borrowed from Ulster Bank.

Even at the peak of the Celtic Tiger property mania, it was widely felt that Dunne had paid way over the odds.

Dunne's plan was to transform Ballsbridge into the 'Knightsbridge of Dublin'. In August 2007, he applied for planning permission for a €15bn development scheme, the centrepiece a 37-storey apartment tower.

Appalled local residents fiercely opposed the scheme. By the time a second, heavily revised application was finally approved in September 2011, the tower was just 12 storeys.

This was too little, too late for Dunne. The Celtic Tiger bubble burst in 2008. Nama appointed receivers to several of his Irish properties in July 2011 while UK-owned Ulster Bank seized control of the Ballsbridge site in January 2012.

Even before that, in an amazingly frank 2009 interview with the 'New York Times', Dunne admitted that "if the banking crisis continues, I could be considered to be insolvent".

Ulster Bank petitioned the High Court to have Dunne declared bankrupt in April 2013, following his failure to satisfy a €163m judgment made against him the previous year. He attempted to counter this by filing for bankruptcy in the US state of Connecticut, whose bankruptcy regime was more debtor-friendly.

In his May 2013 US bankruptcy filing, Dunne stated he had debts of over $1bn and assets of just $55m. In July 2013, the Irish High Court also declared Dunne bankrupt.

If Dunne had thought that by moving to the United States and filing for bankruptcy there he could frustrate the efforts of the American and Irish bankruptcy authorities to recover as much money as possible for his creditors, he was sorely mistaken. Despite operating 5,000km and five time zones apart, Irish bankruptcy assignee Chris Lehane and his US counterpart Richard Coan have co-operated closely.

In the most recent case, a US jury ruled Dunne had transferred assets and property worth at least €18m to his now estranged second wife, former 'Sunday Independent' gossip columnist Gayle Killilea, in order to keep them out of the hands of his creditors.

As Dunne remains bogged down in a transatlantic legal battle that has now dragged on for almost six years, many Celtic Tiger property developers are back in business, making money once more from the booming economy.

Many of these developers had to cut painful deals with Nama and the foreign-owned banks. Often these deals involved surrendering control over valuable assets to their creditors at close to the bottom of the market.

One of them was Joe O'Reilly who lost control of the huge shopping centre in Dundrum as Nama sought to recover the reputed €2.8bn he was once reputed to owe the State 'bad bank'.

However, unlike Dunne, O'Reilly took his medicine, co-operated with his creditors and is now back in business. In 2015, he teamed up with a group of Middle Eastern investors to pay a reputed €170m for the Ballsbridge site - less than half of what Dunne had paid for it a decade earlier.

Does Dunne not wonder sometimes that, if he too had played ball with his creditors rather than engaging in complicated financial and legal manoeuvres, that he would now be back in business - even if on a smaller scale?

Instead he faces the prospect of many more years of legal trench warfare on both sides of the Atlantic.

Irish Independent

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