Former Anglo Irish Bank chief executive David Drumm loses the protection of the US bankruptcy court and is exposed to further litigation from creditors following a judge's denial of a discharge from his debts.

The decision of Massachusetts Bankruptcy Judge Frank Bailey to deny Mr Drumm a write-off of about € 10.5 million in debts means creditors are free to pursue him to recover as much of their debts as possible.

His largest creditor, the publicly owned Irish Bank Resolution Corporation, formerly Anglo, which is owed about € 8.5 million, could choose to take legal action in Ireland or Massachusetts, either in a US federal or state court, to obtain a judgment against him for that amount.

If the judgment is obtained in Ireland, where the bulk of Mr Drumm’s liabilities arise, IBRC could seek to have the judgment recognised in the US courts. This would allow the bank to pursue Mr Drumm for money in the country where he lives and earns a living.

The former banker has been working as a consultant from the offices of US scaffolding company Safway Atlantic, about 15 miles outside New York City, for the past number of years. Any income he makes in this capacity could be targeted by the bank to repay Mr Drumm’s debts.

The bank could pursue his income by way of a court order of garnishment that, under US law, allows a plaintiff creditor to collect debts from a defendant. The money could be obtained from the attachment of assets to a garnishment of wages, forcing an employer to withhold pay from an individual and send it directly to the creditor owed money.

Mr Drumm’s loss of a discharge from bankruptcy, a valuable court record that would protect him from creditors, hinged on his failure to disclose the transfer of more than € 800,000 in cash along with interests in valuable properties to his wife Lorraine from September 2008 into 2009.

Ordinarily, following a ruling like Judge Frank Bailey’s judgment, a creditor might seek to claw back the transfer of assets that were concealed to recoup their debts and would have a strong case in doing so based on the judge’s conclusions in his ruling.

In Mr Drumm's case, the bank's ability to recover these assets is complicated by the fact that the trustee, the court-appointed official appointed to oversee his bankruptcy estate, agreed a settlement with Lorraine Drumm in April 2012.

Under that agreement, the trustee, Boston lawyer Kathleen Dwyer, and Mrs Drumm settled any claims against her that she fraudulently benefited from assets transferred to her by her husband.

She agreed to pay almost € 1 million to the trustee under the deal and retains a share of the remainder of the assets owned jointly with her husband.