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Dan White: Sean Dunne owes €700m and taxpayers might see money back ... eventually

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Sean Dunne.

Sean Dunne.

Sean Dunne.

Developer Sean Dunne, who paid almost €400m for the Jurys' and Berkeley Court hotels in 2005, this week stated that he would not be seeking to be discharged from his American bankruptcy.

The move means that Mr Dunne now remains personally liable for his massive debts, which stand at least €700m.

So does this mean that the taxpayer, which through NAMA is owed at least €185m by Mr Dunne, will recover more money from the developer who filed for bankruptcy in the US in March 2013 and was declared bankrupt in Ireland in July of that year?

In theory probably yes, but things are not that simple.

Ever since Mr Dunne first filed for bankruptcy in the United States he has been engaged in a legal battle with NAMA and Ulster Bank, to whom he owes at least another €160m.

NAMA and Ulster Bank first sought to block Mr Dunne's US bankruptcy and, when that move failed, succeeded in having him declared bankrupt in Ireland also.

For Mr Dunne the main attraction of being declared bankrupt in the United States was that the American legal system treats bankrupts much more leniently than its Irish counterpart.

Bankrupts are discharged, ie released from their debts, after 12 months in the US, as against at least three years in Ireland.

catch

But there's a catch. A very big catch actually.

While the American bankruptcy regime is much easier on debtors, it also demands a far greater degree of disclosure than would be the case in this country.

One person who has been through the US bankruptcy process has compared the disclosure requirements to "getting naked in public".

No matter how embarrassing the details there are absolutely no secrets in a US bankruptcy. The trade-off for being discharged from one's debts after only a year is absolute disclosure.

Both NAMA and Ulster Bank have ruthlessly exploited these US bankruptcy disclosure requirements in their ongoing legal battle with Mr Dunne.

His creditors and the court-appointed bankruptcy trustee have sought further disclosure on financial transfers Mr Dunne made to his wife Gayle Killilea.

Mr Dunne has admitted transferring assets worth at least €40m to his wife.

liable

Last August, Mr Dunne sought to have his US bankruptcy bid set aside but NAMA and Ulster Bank both objected.

This week Mr Dunne has told the US bankruptcy court in Connecticut that he is waiving his right to discharge from bankruptcy. The legal implication of this move is that he remains personally liable for his debts.

Which of course begs the question: Why would Mr Dunne voluntarily give up the right to walk away from his massive debts?

As the legal battle between Mr Dunne and his creditors becomes ever more bitter, the only people likely to benefit any time soon are the lawyers.

Meanwhile, the taxpayer can only hope that Mr Dunne's latest move will result in more money being recovered some time in the dim and distant future.

It is also unlikely to result in significant benefits for taxpayer any time soon.


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