Dunne US bid to speed debt release

Developer Seán Dunne sought absolution in the US courts from creditor claims worldwide because he couldn’t escape debt as quickly in Ireland.

That attempt failed.

Saying he had resided in the US with his wife and children for more than three years, Dunne filed a Chapter 7 petition in March 2013 in Bridgeport, Connecticut, listing debt of $942.2 million (€711.7m).

In June 2013, US bankruptcy judge Alan HW Shiff allowed creditors to continue an involuntary bankruptcy proceeding they attempted to initiate in Ireland before Dunne filed in the US.

Dunne explained his preference for a US bankruptcy, saying he would be forced to wait five to 12 years before wiping out debt in Ireland. Over his objection, Dunne was declared bankrupt in Ireland and a trustee was appointed. The Irish trustee, according to Dunne, is claiming the right to control all his property, even though there’s a parallel trustee in the US.

This week, Dunne filed papers in Bridgeport seeking dismissal of the US case.

He said he can’t afford the cost of litigating with creditors opposing his right to a release from all debt, known as a discharge.

As he’s no longer seeking a US discharge and remains subject to the Irish bankruptcy, no creditors will be prejudiced by dismissal of the US proceeding, Dunne said.

The request for dismissal came after his US trustee and creditors began using the Bridgeport court to investigate what the trustee called €100m in transfers of assets to Dunne’s wife since their marriage in 2004.

The trustee said the transfers were made “for no or nominal consideration”.

Dunne said he and his wife divorced and that he gave her property as part of court-approved matrimonial settlements.

Creditors questioned whether the divorce was bona fide or part of an attempt to hide assets.

An individual bankrupt has no absolute right to dismissal of a bankruptcy, even one commenced voluntarily in the US. Creditors may object to dismissal, aiming to continue using the US court to locate assets and sue for recovery of fraudulent transfers. Shiff is to hold a hearing on September 16 to consider dismissing the US bankruptcy.

Dunne originally listed property and debt with a total claimed value of $55.2m and liabilities of $942.2m. The assets include $40.8m of real estate, all in Ireland.

Bloomberg