Dunne’s liabilities don’t quite add up

If you are unfortunate enough to be a creditor of Sean Dunne and need to calculate exactly what he owes you ‘do the math’, as the Americans say, because sums aren’t his thing.

In his bankruptcy proceedings in the US, Dunne estimated his assets at between $1m-$10m, but under US bankruptcy law he is not required to provide details of these.

He admits to owing “between $500m and $1bn (€390m-€780m)” and the indications are that his level of indebtedness could be far more. He really hasn’t a clue and appears to be far less stressed than your average Irish homeowner in negative equity.

That’s because successful bankruptcy proceedings would see him debt-free while the hard-pressed residents of Wisteria Lane (or Murphy’s Boreen) must suffer on.

The billion or so he owes isn’t all to wayward banks and big business. He owes a bundle to modest commercial enterprises in Ireland — legal partnerships, small- town auctioneers, management consultants, architects and independent contractors. His Irish creditors include Arthur Cox solicitors and Beauchamps solicitors, both based in Dublin City.

He also owes money to the IDA, three county councils, former Irish attorney general Paul Gallagher, SC, and Garrett Simons, SC.

He is in debt to both AIB and Bank of Ireland; BKD architects, from Harcourt Terrace in Dublin; quantity surveyors Bruce Shaw; financial services company Certus; Chase and Partners, retail and leisure property consultants; and Colm McEvoy, an auctioneer from Naas, Co Kildare. He is also in hock to both the American Internal Revenue Service and the Irish Revenue Commissioners.

None of the 14 creditors contacted by the Irish Examiner indicated a wish to comment on Dunne’s bankruptcy proceedings.

CBRE had “no comment” to make. An IDA spokesperson said: “The IDA does not comment on any financial arrangements it has with clients or service providers — this includes any grant aid or property-based transactions.”

The bankruptcy filing shows that Dunne underwent debt counselling, as required by US law. A certificate is included in the bankruptcy filing showing a counselling session was held over the internet by someone called “Jai D Bhatt”.

Perhaps he or she might make themselves available to his Irish creditors.

Q&A - By John Walsh, Business Correspondent

Q: Why choose the US to declare bankruptcy?

A: Alan Shatter, the justice minister, is in the process of reforming Ireland’s antiquated bankruptcy laws. Until now, it took 12 years to emerge from bankruptcy in this country. However, through the new personal insolvency legislation, this has been reduced to three years in some cases. But it is only open to candidates with debts of €3m and under. Sean Dunne has debts of over €500m. Consequently he would need the agreement of his creditors before he could start bankruptcy proceedings. Moreover, his creditors would have a much greater say on whether his debts are ultimately discharged.

In the US, a court decides on what debts are ultimately written off and proceedings take place over a six-month period.

Q: If Sean Dunne is successful, will this pave the way for Irish people to take advantage of the more lenient US regime?

A: The temptation will obviously be there, but first, candidates will have to secure a visa and reside in the country before they can apply for bankruptcy. In the case of Mr Dunne, he secured a temporary business visa in 2010. But an applicant would have to prove that he or she could make a substantial investment in the country before receiving this type of visa.

Mr Dunne’s wife, Gayle Killilea, has made a number of property investments in the US over the past three years. Generally it is quite difficult to secure a work or residential visa for the US, which will put a natural block on applicants looking to use the country’s bankruptcy laws.

Q: Will Britain remain the destination of choice for ‘bankruptcy tourism’?

A: There have been a number of Irish property developers who have used Britain’s bankruptcy laws to protect themselves from their Irish creditors. Proceedings in Britain take one year. However, any Irish person looking to use their system will first have to prove that their primary residence is in that country. The upside is that all debts are discharged 12 months after bankruptcy has been granted.

But it is likely that if the person wished to return to this country, their creditors would notify the Irish Credit Bureau, which means accessing any form of credit for six years would be extremely difficult.

British bankruptcy lawyer Steve Thatcher who has a number of Irish clients, says demand for his services remains brisk. The leaking of personal insolvency guidelines, particularly in the area of expenditure, had convinced many people that they are better off going to Britain, he argues.