Seán Dunne faces the possibility of being declared bankrupt in Ireland as well as in the United States after a Connecticut court allowed Ulster Bank to continue its Irish bankruptcy action against him.
In a major setback for the Co Carlow developer, the US bankruptcy court in Connecticut, where he now lives, approved an application by Ulster Bank - one of his biggest creditors which is owed more than €300 million - to continue with Irish legal proceedings to have him adjudicated a bankrupt in Ireland.
In March Mr Dunne filed for bankruptcy in the US, where the bankruptcy regime is not as severe as in Ireland, blaming Ulster Bank’s Irish bankruptcy proceedings against him.
Yesterday Connecticut bankruptcy judge Alan Shiff granted Ulster Bank’s motion which was supported by his other major creditor, the National Asset Management Agency.
The ruling also allows the lender to seek the appointment of an Irish representative to cooperate with the US court on the liquidation of Mr Dunne’s bankruptcy estate for the benefit of his creditors.
A factor in the judge’s ruling was the decision of the official appointed by the US court to manage Mr Dunne’s bankruptcy to support the bank’s application.
If the Irish High Court grants the bank’s application, it would have the effect of making one of Ireland’s most prolific developers of the Celtic Tiger era declared bankrupt on both sides of the Atlantic.
The Irish court may not agree with Ulster Bank’s action, Judge Shiff said, but that was “up to the Irish court,” he said.
The judge said that Irish and Connecticut courts would work towards “a common goal” and act in the best interests of the creditors on how to handle Mr Dunne’s bankruptcy estate.
Describing Mr Dunne’s bankruptcy now as “like a Pandora’s box,” the judge asked for every future application from the parties to be put to him individually so he could decide on each one separately.
Ulster Bank told the court that Mr Dunne’s bankruptcy also required an Irish representative as it involved work in Ireland, Switzerland, South Africa and potentially England.
US lawyers for Ulster Bank had argued that Mr Dunne’s filing for bankruptcy in the US was a “concerted effort” to avoid the Irish bankruptcy proceedings against him.
The bank said that he had assets of just $975 (€750) in the US, including $15 in a US bank account, but debts of almost $1 billion outside the US owing to Irish creditors.
The bank said that its Irish proceedings preceded Mr Dunne’s US bankruptcy filing by six weeks and described his Connecticut bankruptcy as “the second case.”
Lawyers for the US trustee overseeing his US bankruptcy case said that a “dual bankruptcy” would recover the most money for creditors given that all of his properties were outside the US.
Ulster Bank’s attorney Hank Baer said afterwards that he was delighted with the judge’s ruling.
