Developer continues to enjoy high life in US

It was one of the signature deals of the boom.

The 2005 purchase of the Jurys and Berkeley Court Hotels in Ballsbridge for €379m was to launch Dublin into the high-rise era. The hotels would be demolished to make way for a €1.5bn mixed development, centred around a 37 storey ‘diamond cut’ skyscraper.

The fact that the hotels continue to operate, albeit in the budget range, tells you all you need to know about the how the deal fared. But Sean Dunne — the man whose ambition drove this visionary project — gave every impression of having escaped the collapse of his empire unscathed.

He left Ireland and her exploding bubble behind, moving first to Switzerland, then on to Greenwich Connecticut, where he found himself a high-end property in one of the most exclusive gated communities in the US. Budget hotels have not featured in his private life. So far.

Now that Ulster Bank has been given permission to serve bankruptcy proceedings on Dunne in the US, speculation is mounting that he may declare bankruptcy in his adopted country.

Ulster Bank was the leading lender in the failed Ballsbridge project. Last May, Dunne consented to a €164.5m summary judgment order against him at the Commercial Court over his personal guarantees of loans related to the Ballsbridge purchase.

If Dunne does declare bankruptcy in the US he will be following in the footsteps of former Anglo Irish Bank chief executive David Drumm, who filed for bankruptcy in Massachusetts in 2010, thereby circumventing proceedings taken by his former employer.

Bankruptcy in the US is a walk in the park compared with the Irish regime, which is amongst the most draconian in the world. Unless the High Court endorses a higher figure, a bankrupt is only allowed keep goods to the value of €3,100. Everything else gets sold.

The fourth son of a Carlow town clerk once told an interviewer that when he needed a bath as a child, he would take a swim in the River Slaney. But as his career took off, Dunne left the murky waters of the Slaney far behind. During the good times, he would take a private suite at Punchestown Racecourse, directly across from the winning post. Though he eschewed a private jet, he was a regular customer of Netjet, a company which hires out at a rate of €4,000 per hour. He flew friends to rugby matches and bought a 24-seat corporate box in the newly redeveloped Landsdowne Road; price tag, €475,000.

Dunne’s wedding to journalist Gayle Killilea was another slice of boom era excess. A who’s-who of Irish society (Ronan O’Gara, Karen Millen, Michael Fingleton) on a two-week cruise aboard Aristotle Onasis’s yacht Christina O. During the wedding speeches Charlie McCreevy and Bertie Ahern phoned in their congratulations.

Later that same year, at his wife’s Pirates of the Caribbean-themed 30th party in the five-star Park Hotel in Kenmare, Dunne presided over the event dressed as an admiral.

Every element of that Ballsbridge deal bore the same signature. Thirteen international architects were invited to tender. Eight were flown over the seven-acre site in a helicopter. The winning design — featuring the aforementioned tower, 12m higher than the Spire on O’Connell St — also included 600 apartments, offices, a theatre, an arthouse cinema and jazz club as well as an outdoor ice rink in winter.

The plan was approved by the planning authority, but An Bord Pleanála rejected the design on appeal in Jan 2009. The hotels were subsequently re-opened under the D4 brand and Dunne lost control to the banks last year.

By Dec 2010, the debt owed by Dunne through his DCD group of companies to Nama stood at €358m. This isn’t even half of it. The lion’s share of his total bank liabilities — almost €900m — is owned to non-Nama institutions, including Ulster Bank and the former Bank of Scotland (Ireland).

While Ulster Bank has been using the Commercial Court to recoup its losses, Nama has gone after Dunne in his adopted country. Last July, the State’s bad bank petitioned the Superior Court in Stamford, Connecticut to freeze Dunne and Killilea’s assets. Nama claimed that the transfer of a half-share in a Geneva property from Dunne to his wife was ‘fraudulent’, given the fact that Dunne owed so much money to banks in Ireland. Nama also claimed that properties purchased by Killilea in the US were bought with his money.

Debts of €900m have not dampened the couple’s enthusiasm for property development. The significant factor in this new chapter of Dunne’s life is that everything happens in Killilea’s name. The couple argues that the high-end properties which they’ve picked up since relocating to the US have all been bought using money transferred to his wife by Dunne long before either the property crash or the establishment of Nama.

When the case came to court, Nama’s attorney argued that there was no way Killilea could have bought any of this property on a journalist’s income. But the judge rejected Nama’s petition, saying that the agency hadn’t the evidence to prove its claims.

That was last summer. Since then, Nama and the couple have been in and out of court without any sign of a resolution. Thus far, Nama has proved tenacious in its pursuit of hidden developer assets. Earlier this month, the High Court heard that Nama would receive more than €150,000 from the sale of an 8.38-carat diamond ring at auction in Florida. The ring had been owned by Mary McCabe, wife of builder John McCabe, whose companies owe Nama €235m.

Sean Dunne, however, is easily as familiar with the courtroom as the building site. One of his early development vehicles, Berland Homes, went into voluntary liquidation in 1996 following a bitter legal battle with his erstwhile partners. In 2000, he took Niall O’Farrell of the Black Tie group to court, accusing him of encroaching on his half of a site they had divided between them. In 2006, Dunne was back in the High Court arguing against an Bord Pleanála decision in relation to the former Chester Beatty Library site in Donnybrook. The same year saw another high-profile High Court action centring on the Whitewater commercial development in Newbridge Co. Kildare.

If Dunne is forced to seek bankruptcy in the US there’s little doubt that this will only be the latest chapter in an ongoing saga. Don’t expect to see him back swimming in the Slaney anytime soon.