FORMER Anglo Irish Bank chairman Seán FitzPatrick was declared a bankrupt by the High Court yesterday at his own request, just days after opposition from Anglo ensured the collapse of his proposed settlement deal with creditors.
The official assignee in bankruptcy, Chris Lehane, will now deal with Mr FitzPatrick’s creditors, who are owed €150 million. His assets are estimated to be worth €50m, including investments of €45.7m, and €1.23m in accounts in various financial institutions.
He is the joint owner of six properties, including his family home and another house in Greystones, Co Wicklow; a house in Bray, Co Wicklow; and apartments in Marbella, Spain, at Smithfield Market, Dublin, and Killiney Court, Killiney. Only the Marbella apartment is not subject to a mortgage.
A proof of debt process by the official assignee, not yet complete, has estimated the level of Mr FitzPatrick’s unsecured creditors at €70,292,885. He is also appealing some €2m in various tax liabilities.
Anglo is the largest creditor of its former chairman. It says it is owed €110m and its counsel, Paul Gardiner, yesterday rejected claims that it would have done better under the proposed settlement deal.
Because Anglo did not support the deal, Mr FitzParick could not secure the necessary 60% support of creditors and that led to his petitioning for bankruptcy.
A motion by Anglo to end court protection for Mr FitzPatrick did not proceed yesterday because he was adjudged bankrupt. Mr Gardiner said that motion had been brought to ensure the bankruptcy petition did go ahead.
Mr Gardiner said Anglo had made clear on March 12 last that it was rejecting an informal scheme advanced by Mr FitzPatrick and the formal scheme advanced since then was “no more favourable” to the bank.
It was not the case Anglo would get a better outcome from a scheme than bankruptcy, he said. The bank has some 85% of Mr FitzPatrick’s debt, he added.
Mark Sanfey, counsel for Mr FitzPatrick, said he would not argue at this stage about something that was “academic”.
Mr FitzPatrick claimed his creditors would have got a dividend more than twice as large under his scheme than was expected under bankruptcy.
His scheme included selling his half share in his family home (which has been valued at €1.5m) and making available his half share of total pension assets of €3.4m to creditors.
Mr FitzPatrick was not in court yesterday.
At 11am, Mr Sanfey, for Mr FitzPatrick, said he had asked the court last Friday to lift the court protection order on his client given his intention to move the petition for bankruptcy.
The context in which the petition was brought arose after the court granted Mr FitzPatrick’s request on March 15 last for a protection order, counsel said.
Mr FitzPatrick had taken the view that he should provide full disclosure and try and secure the most favourable realisation of his assets for creditors.
An independent forensic accountants report setting out all assets and liabilities and a draft scheme had been put before creditors at a meeting last Wednesday.
The creditors were given two different overviews related to what would happen if Mr FitzPatrick was declared bankrupt or if a scheme was agreed and there was a “significantly better outcome” under bankruptcy. Several creditors had spoken in support of the proposed scheme.
Mr Sanfey said Anglo did not speak at the meeting and had previously said it would not treat with any proposal from Mr FitzPatrick, no matter what that was.
Mr FitzPatrick’s side met Anglo after the creditors meeting. It said it would not support the scheme and Mr FitzPatrick then decided to “bow to the inevitable”. He was now applying to be adjudicated bankrupt to ensure a “fair and even-handed” distribution of his estate.
The judge noted Mr FitzPatrick’s undertaking not to deal with his assets in any way was spent as of yesterday as the official assignee had taken over.
Creditors also have the option of seeking to have a trustee appointed to deal with the bankruptcy.
Denis McDonald, counsel for the official assignee, said he wanted to engage counsel and a financial adviser and the judge made those orders.
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