A bankrupt businessman is being chased for $3.5m (€2.6m) by an American company after a botched attempt to invest in a Texan oilfield.
Wicklow businessman Garth Collier was allegedly trying to buy a share in the oilfield with two others at a time when he was an undischarged bankrupt in Ireland with debts of €1.4m.
Mr Collier, a former property developer, was in charge of raising the finance for the venture, according to US court papers. But when the money failed to materialise, his co-investor was left out of pocket and sued him for $3.5m in 2008.
Phoenix Mining & Mineral LLC, the Texas-based company that sued Mr Collier, was unaware of his bankruptcy status at the time of the deal.
Mr Collier disputed the account given in a US court of his role in the transaction.
The former property developer from Wicklow went bankrupt in 1996 owing €1.4m to several banks, the Revenue Commissioners and a number of private individuals.
Mr Collier automatically qualifies for a discharge from his €1.4m debt this year. Recent changes to personal insolvency laws mean that a bankrupt is released from their debts after 12 years. But the automatic discharge won't apply to the $3.5m judgement, which Phoenix Mining & Mineral seems intent on pursuing.
Mr Collier said in a statement that he was not proud of his bankruptcy: "I was declared a bankrupt in 1996. I am not proud of this and I have lived with the pain and shame of this every day over the past 15 years. The official assignee is aware of my counter claim against the main creditor. I have worked with all my ability to rectify the situation."
He has also distanced himself from the failed oil deal that has saddled him with an expensive judgement: "I never signed any agreement in relation to this proposed company acquisition. I have never met with Phoenix Mining and Mineral LLC. I do not know the owner Mr Larry Ewers and have never spoken to him or any representative of the plaintiff. I never received any court papers from a US court. I was never served with any claim. I did not appear in court to defend the case. The other defendants are all based in the USA and I understand that they had been discussing the possible purchase of an oil company from Phoenix. Finance was not available so the deal did not proceed."
In US court documents, Phoenix Mining & Mineral claimed Mr Collier was involved. Phoenix described itself as a Texan company that "searches out opportunities to purchase oil, gas and mineral interests in Texas". It found an "opportunity" in 2005 in the Aguilares oil field, and shortly after that, a company called Treasury Oil approached Phoenix wanting to buy in for 50 per cent.
According to court documents, Mr Collier, then based in Geneva, was in charge of raising the finance. He had allegedly obtained a Venezuelan bond and that "was to be the source of funding for the purchase of the interest in the properties in Texas. Phoenix claimed it had stopped looking for other investors at that stage and paid $2m to extend the closing date of the sale, while waiting for the money to materialise. But the funds did not materialise.
In court papers, Phoenix Mining alleged that Treasury Oil was a "sham corporation -- nothing more than the alter ego of Collier".
Phoenix sued for damages but Mr Collier and his two business partners did not defend themselves in court. Default judgements were secured in their absence against Mr Collier, and his two associates, who could not raise the funds to pay a legal team. Ronald Organ, one of the associates, also unaware of Mr Collier's bankruptcy status, said he believed he "made genuine efforts to raise the money" before the deal fell through.
In Mr Collier's case, he was found liable for damages for "common law fraud in the inducement and negligent misrepresentation" and ordered him to pay $2.4m in actual damages and $1.2m exemplary damages.
Phoenix Mining and Mineral is apparently determined to pursue the bankrupt businessman for the money. An attorney with an international law firm that has been "tracking" Mr Collier said: "Phoenix Mining & Mineral will use all legal remedies at its disposal, at the appropriate time, and in whatever jurisdiction necessary, to collect its judgement against Mr Collier and his affiliates."
Although insolvency laws are now in the process of being eased, Mr Collier was subjected to draconian restrictions imposed on all bankrupts in Ireland. Although allowed to trade and earn a living, bankrupts are barred from holding company directorships, are required to declare their bankruptcy when seeking credit of more than €650 and must ask permission of the assignee before leaving the country.
When contacted by the Sunday Independent earlier this month, the well-connected Mr Collier said he has acted as a mediator in business transactions: "Basically, I have friends and acquaintances and contacts. I can arrange finance for people," he said.
"If you are bankrupt in Ireland, you lose. There is no place for you in Ireland. I had to try to make a living elsewhere," he said. "When you go through bankruptcy, it's like your world ends, and you have no future."