Creditors get little joy from US bankruptcy trustee’s €7m quest for assets of Seán Dunne

Court filings reveal significant legal costs run up by trustee Richard Coan since Carlow-born Mr Dunne relocated from the US to England in 2019.

They show a London law firm hired to act as special counsel for the trustee has submitted bills for in excess of €560,000 for its work in getting the bankruptcy recognised in England and Wales and obtaining information about the location of assets in the bankruptcy estate.

This work by Addleshaw Goddard included participating in a contested hearing of the High Court in London in October 2020 where the property developer and his ex-wife, former journalist Gayle Killilea, opposed the making of orders that they be privately examined and produce documents.

According to a filing with the United States Bankruptcy Court for the District of Connecticut, an examination of Mr Dunne in London in December 2020 assisted in discovering assets which may be recoverable in the bankruptcy.

Mr Dunne has since applied to the English courts for an order rescinding recognition for the trustee in the UK.

According to filings, the trustee recently asked the court in Connecticut to approve the payment of around €250,000 to Addleshaw Goddard. The court has yet to rule on the application.

Last January US bankruptcy judge Julie Manning criticised the trustee over huge sums spent on lawyers and consultants in the pursuit of Mr Dunne’s assets.

The judge said that at some point a “cost-benefit analysis” would have to be done as expenses of around €6.6m had been racked up by that stage. Around half of that sum was said to have been spent on “administrative expenses” such as lawyer and financial expert fees.

However, since then the Irish Independent has learned the judge approved the payment of €705,000 to consultancy firm RSM, which examined Mr Dunne’s pre-bankruptcy financial affairs.

The judge also approved the granting of a loan of €1m by Mr Dunne’s main creditors, Nama and Ulster Bank, to the trustee. This brought to €4.5m the sum loaned by creditors to Mr Coan since 2014 to help cover the costs of his work.

In 2019, a US jury awarded Mr Coan €18m after finding Mr Dunne had fraudulently transferred property, cash and other assets to Ms Killilea.

The award includes €14m from the 2013 sale of Dublin mansion Walford, which Mr Dunne had purchased in trust for his then wife for €57m in 2005. The jury ordered Ms Killilea to pay the damages.

At a bankruptcy status hearing last July, Judge Manning was told by a lawyer for the trustee, Timothy Miltenberger, that efforts had been made for two years to settle the jury verdict but these had proved fruitless.

“We consider settlement at this point to be extremely unlikely,” he said. “The trustee has essentially made the business decision that litigation would be faster and more beneficial to the estate than continued efforts to settle it.”

Mr Dunne has been seeking a retrial of the 2019 fraudulent transfer action, arguing that one of the main findings was later contradicted by the High Court in Dublin.

The €7m-plus cost of pursuing Mr Dunne’s assets only relates to the work of Mr Coan. Costs incurred by Ireland’s Official Assignee in Bankruptcy have not been disclosed.