Over $12m from sale of Walford handed over in Sean Dunne bankruptcy case

More than $12 million of the proceeds from the sale of Walford, once Ireland’s most expensive home, have been handed over to the trustee in one-time property mogul Sean Dunne’s US bankruptcy case, according to court papers filed on Friday.

The funds were turned over earlier this month pursuant to a proceeding in an Irish court, where Mr Dunne also faces a bankruptcy case, the filing says. It does not specify which court.

“The Irish proceedings have been resolved and the special fund [which holds proceeds of the Walford sale] has been disbursed,” court papers state. “Currently the trustee is holding more than $12 million (€11.11 million) of the proceeds from the Walford sale.”

The papers don't say what happened to the rest of the €14 million from the sale of the home to a trust linked to billionaire Dermot Desmond. Timothy Miltenberger, an attorney for the trustee, declined to comment on Monday.

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Divorced

Mr Dunne said he bought the home in 2005 for €58 million for his then-wife Gayle Killilea, but a US jury concluded last June that he fraudulently transferred the property to her as part of a scheme to shield assets from his creditors.

The jury ordered Ms Killilea, who revealed after the trial that the couple had divorced, to surrender a total of €18.1 million to the trustee. That case remains unresolved.

Settlement talks between Ms Killilea and the trustee have been under way since last autumn, court papers state but no proposed resolution is before the US District Court in New Haven, Connecticut where the trial took place, and which must approve any deal.

The revelation that $12 million-plus has been transferred to the trustee came in papers filed in the case’s latest twist, a last-minute attempt by Mr Dunne to block Ms Killilea from using the Walford proceeds to settle the US case.

Mr Dunne sought an injunction barring disbursal of the funds in a New York state court instead of in the US court in Connecticut where the case had played out over the past seven years.

He alleged that part of the money was intended to benefit his four minor children from his marriage to Ms Killilea.

Angered

In doing so, Mr Dunne also took legal action against John Dunne, his son from his first marriage, and a director of Yesreb, a Cypriot special purpose vehicle that holds the funds in escrow.

Sean Dunne’s legal move angered the trustee, who accused him and his lawyer of engaging in “blatant forum shopping” in an effort to find a judge unfamiliar with the case.

They succeeded in getting the matter returned to US court in New York, prompting Sean Dunne’s attorney to file papers trying to get it sent back to state court.

"Sean Dunne has tried to voice his concerns over the misuse of the Yesreb Specific funds since at least July but has been stonewalled and excluded from discussions and negotiations even as his attorney raised the matter," Sean Dunne's attorney Luke McGrath wrote. Mr McGrath's office declined to comment on Monday.

In response, trustee attorney Ryan Sullivan wrote that Sean Dunne was trying “to escape federal court in Connecticut”.

“This civil action is blatant forum shopping in an effort to interfere with the administration of his bankruptcy case, which case now focuses on recovering assets that Dunne transferred with actual fraudulent intent,” Mr Sullivan said in his most recent court filing.