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Dan White: Bankrupt Seanie to live off €1.5m pension

Former Anglo Irish Bank chairman Sean FitzPatrick filed for bankruptcy today. What does this mean for FitzPatrick and his creditors? Dan White investigates.

What does being bankrupt actually mean?

At its simplest it means that you owe more than you own and that you can no longer repay your debts in full. Once you are declared bankrupt your creditors, the people to whom you owe money, can seize all of your assets and sell them to pay off some of your debts.

How much does FitzPatrick owe?

Loadsamoney. According to information supplied to the High Court by his lawyers, FitzPatrick owes his creditors a massive €150m. Most of this, about €110m, is owed to Anglo Irish, which FitzPatrick seems to have treated as a kind of personal piggy-bank during his 22 years as either chief executive or chairman. With Anglo now owned by the State, it is the taxpayer which is now on the hook for this money.

What are the chances of the taxpayer or FitzPatrick's other creditors ever seeing their money again?

Extremely remote. According to figures supplied to the High Court by FitzPatrick's lawyers, the disgraced former banker's assets exceed his liabilities by at least €80m and that the best his creditors can hope to get back is 20 cent of every euro which they are owed.

What are the advantages to FitzPatrick of filing for bankruptcy?

Filing for bankruptcy means effectively drawing a line under your debts. FitzPatrick's creditors will be able to help themselves to his assets, including his home, pension and car, but that's it. They will not be able to pursue him for any shortfall.

FitzPatrick has a €3m pension from Anglo. What happens to that?

Under law a wife is entitled to half of her husband's pension.

This means that while half of FitzPatrick's pension, about €1.5m, will go to his creditors the other €1.5m will go his wife. This is now the couple's only income. A woman in her early 60s with a €1.5m pension pot could expect an annual income of €50,000-€60,000. Hardly absolute poverty but a long way short of the €2m a year that Seanie was drawing from Anglo.

Why didn't FitzPatrick try to cut a deal with his creditors?

He did. However, under law 60pc of your creditors, both by number and value, have to approve any compromise between a borrower and his or her creditors. Unfortunately for FitzPatrick, Anglo Irish Bank, to whom he owes most of his debts, refused his offer.

Will FitzPatrick be the only high-profile of the Celtic Tiger bust?

Almost certainly not. With virtually every builder and property developer in the country bust and NAMA spitting tacks after being misled by the banks about the proportion of bad loans it bought from them that were actually paying interest, expect a procession of high-profile bankrupts to appear before the courts.

Will any of these other high-profile borrowers seek to wriggle out of bankruptcy?

Yes. It's already happening with dozens of builders and property developers having quietly relocated to the UK, which has a much less severe bankruptcy system, in recent months.

What are FitzPatrick's future prospects?

Bleak. Now the poster-boy of the excesses of the Celtic Tiger era the 62-year old FitzPatrick is virtually unemployable. Once worth over €80m, he is now penniless and stands to lose his home and pension. He can't borrow more than €650, assuming he could find a bank prepared to lend him the money, without disclosing the fact that he is a bankrupt.

What are the benefits to the rest of us of FitzPatrick filing for bankruptcy?

Always the smuggest and most arrogant of our bankers, Seanie's been exposed for the charlatan that he always was. Now that it is clear that the emperor has no clothes we will no longer have to endure his lectures. Who can forget his refusal to apologise for the banks' excesses when being interviewed just after the Government had saved the banks?