Simon Carswell: Dunne faces long battle in US as case rolls on

Property developer Sean Dunne thought that by filing for bankruptcy in his new home in the United States in March 2013, he was preempting Ulster Bank's legal pursuit over a €165 million debt in Ireland.

Now, following the Supreme Court’s decision not to set aside his Irish bankruptcy – secured on a petition by Ulster Bank in July 2013 – he remains bankrupt in two countries, and fighting hard in both.

Dunne and his wife Gayle Killilea, the former newspaper gossip columnist, have been embroiled in a legal battle with his creditors in the US for almost three years. It has become a cat and mouse game as both sides make moves to gain advantage over the other.

That game extended to Ireland when Ulster Bank managed to have Dunne adjudicated a bankrupt in Ireland, home to his property development empire that crumbled with the 2008 economic crash, in July 2013.

There is now a legal action in South Africa too, as the developer's bankruptcy official Chris Lehane seeks to recover assets he claims Dunne fraudulently transferred to Killilea.

US chapter

The US part of this labyrinthine saga started in 2012 in a state court, the

Superior Court

of the State of

Connecticut

, near where the couple lived in Greenwich, the upscale commuter community for Manhattan’s wealthy elite.

The National Asset Management Agency, which has a judgment for €185 million against Dunne, sued the couple and property companies his wife maintains are hers and not theirs. The State agency, Dunne's biggest creditor, was owed hundreds of millions of euro on foot of his loans from Bank of Ireland and Irish Nationwide Building Society. It sought to stop the couple's burgeoning American property business.

Nama claimed that Killilea was using money fraudulently transferred to her by Dunne to build, develop and sell property in Connecticut and New York. The couple deny this.

Killilea claimed as recently as a few days ago, in the latest court filing, that Dunne's net worth in 2007 was €700 million, according to accountants KPMG, and that he transferred tens of millions of euro to her at a time when he was "incredibly wealthy".

Honeymoon promise

At the centre of the litigation are two agreements the couple maintain were signed in 2005, during their honeymoon in

Thailand

, and a follow-up agreement in 2008 in which he promised her €100 million, a fifth of his fortune. The assets included Walford on Shrewsbury Road, the most expensive house ever bought in Ireland, that he paid €58 million for and gifted to her in 2005.

Since then, the US litigation has escalated, with court-appointed trustee, Connecticut lawyer Rich Coan, who is overseeing Dunne's US bankruptcy, taking various legal actions to recover the transferred assets for creditors. He is supported by Nama and Ulster Bank.

Coan has stepped into the shoes of Nama in its original 2012 state court action, applying to move it up to a US federal District Court in Connecticut. In March Coan filed two “adversary proceedings” in the Bankruptcy Court. One covers the American assets he is trying to recover.

The other covers disputed assets outside the US he can pursue should Lehane back in Dublin fail to recover in his own legal actions. This means all bases are covered and Coan’s rights are preserved to pursue Dunne in the US and beyond.

Killilea is fighting back. She wants the fraudulent transfer case heard before a jury in the District Court, not the Bankruptcy Court . She is also trying to get the court to lift lis pendens notices Coan has slapped on her properties in Connecticut.

The US litigation doesn’t look like ending any time soon.