THE DECISION to declare void insurance policies provided by two companies to Michael Lynn means that investors and banks have lost another means of recovering multimillion euro sums owed to them by the missing solicitor.
Mr Lynn held professional indemnity insurance with Chubb Insurance Company and WR Berkeley Insurance Europe. Their policies have been declared void due to alleged fraudulent misrepresentation and non-disclosure of material facts. Another of Mr Lynn’s insurers, AIG, had voided the solicitor’s policies last year.
The solicitor’s known debts total €84 million, though this only comprises his borrowings from 11 lenders and doesn’t include debts owed to clients and investors who paid Mr Lynn substantial deposits for Irish and overseas properties.
Most banks have written off their loans to Mr Lynn and did not contest the applications by the insurers to cancel their policies.
It has still to be determined whether Fiona McAleenan, a solicitor in Mr Lynn’s firm, is entitled to insurance cover on any undertakings she signed while working in his legal practice.
Mr Lynn had insurance cover of about €11 million. The cancellation of the policies with the two companies could now force Mr Lynn’s clients to turn to the Law Society’s Solicitors’ Compensation Fund, if they have not already done so.
Claims totalling €13.5 million against the fund were received by the Law Society in the first seven months of last year, most of which related to Mr Lynn and disgraced Dublin solicitor, Thomas Byrne.
Some €4 million was paid out by the Law Society fund in 2007 to clients of Mr Lynn and Mr Byrne.
The liquidator and receiver of two of Mr Lynn’s property companies has lodged claims against the fund, though they have yet to be decided on. If successful, any money dispersed will be paid to the banks and other creditors of the firms, including property investors.