Dan White: 'How Ballsbridge bankrupted Sean Dunne'
Bankrupt property developer 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 time, right at the peak of the Celtic Tiger property mania, it was widely felt that Dunne had paid way over the odds. A newspaper vox pop of rival property investors, conducted just after the deal had been announced, revealed that most them reckoned that Dunne had overpaid by at least €100m.
Dunne’s plan was to transform Ballsbridge into the "Knightsbridge of Dublin". In August 2007 he applied to Dublin City Council for planning permission for a €15bn development scheme, the centrepiece of which was to have been a 37-storey apartment tower.
Appalled local residents fiercely opposed the scheme. By the time a second, heavily revised, planning application was finally approved by An Bord Pleanala in September 2011, the proposed apartment tower had been reduced to just 12 storeys.
This was too little, too late for Dunne.
The Celtic Tiger bubble burst in 2008 leaving the banks with over a hundred billion euro of suspect property-linked loans. NAMA, which took over the bad property loans of the Irish-owned banks, 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 followed up on its seizure of the Ballsbridge site by petitioning 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 move by filing for bankruptcy in the US state of Connecticut, whose bankruptcy regime was then far more debtor-friendly than Ireland’s.
In his May 2013 US bankruptcy filing, Dunne stated that he had debts of over $1bn and assets of just $55m. With such huge debts and no prospect of repaying them, the US court granted Dunne’s request. 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 the difficulties posed by operating 3,000 miles and five time zones apart, Irish bankruptcy assignee Chris Lehane and his US counterpart Richard Coan have co-operated closely in the Dunne case.
As the financial vice tightened following the property crash Dunne resorted to ever more desperate methods to preserve at least some of his previous wealth. In the most recent case, a US jury ruled that he 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 hands of his creditors.
The biggest transfer to Killilea was the €14m received from the 2013 sale of Walford, the house on Dublin’s ultra-posh Shrewsbury Road for which Dunne paid an utterly daft €58m in 2005. Fourteen years later the price paid for Walford remains a record an Irish residential property.
Meanwhile, as Dunne remains bogged down in a transatlantic legal battle that has now dragged on for almost six years, many of the other Celtic Tiger property developers are back in business, making money once more from the booming Irish 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 these developers was Joe O’Reilly who lost control of Ireland’s largest shopping centre, Dundrum, as NAMA sought to recover the reputed €2.8bn which 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 the property 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.