Irish duo ‘abused UK bankruptcy system’

Two Irish property tycoons have been accused of cynically trying to abuse Britain’s bankruptcy regime by hiding property and transferring funds to their families and associates.

An examiner with the British Insolvency Service, Allan Mitchell, warned that Britain should not be seen as a quick-fix bankruptcy service which can be abused.

The Irish developers received restrictions totalling 16 years for trying to put property and money beyond the reach of their creditors, with one of them clearing over £1m (€1.17m) out of his bank account in less than two weeks in the months before he declared bankruptcy.

A string of high-profile Irish moguls have become bankruptcy tourists in Britain in recent years because they are discharged with a clean sheet after just one year. However, Mr Mitchell said the service will vigorously pursue anyone attempting to abuse their system.

“The Insolvency Service will vigorously pursue those attempting to abuse the UK insolvency regime and deprive their creditors.”

The service revealed yesterday that the bankruptcy restrictions against the developers followed investigations by its Stockton and Leeds offices.

Patrick Gerard Byrne and Martin Doran have signed undertakings accepting nine and seven years of bankruptcy restrictions, respectively.

Mr Byrne, aged 44, was declared bankrupt in Britain in Nov 2011 after he had moved to Spennymoor, Co Durham, from Newbridge, Co Kildare. He had debts of close to €100m.

A subsequent investigation by the official receiver found that in the months prior to his bankruptcy he made several transfers from his personal account at the National Irish Bank to relatives or associates in informal and unwritten arrangements which were impossible to prove.

On Apr 28, 2011, the balance of Mr Byrne’s account was €1.2m, but in just less than two weeks on May 9, 2011, the balance was just under €2,000

The service revealed that he transferred €500,000 to his estranged ex-wife, claiming this was a settlement to release him from any financial obligations to the marital home, which was in negative equity following the collapse of the Irish property market.

He also transferred €500,000 to the niece of a business associate, claiming this was as repayment of a loan and transferred €114,000 to his sister and €82,800 to a solicitor.

Martin Doran, aged 57, from Duncormick, Co Wexford, was declared bankrupt in Britain in Dec 2011. He had debts of close to €145m. In the months prior to his bankruptcy, he sold land at Ballyfrory in Co Wexford and deposited the €164,092 proceeds in his wife’s account.

The service said that after petitioning for his bankruptcy but before the order had been passed, he received a €195,055 tax refund into the joint account he held with his wife, €100,000 of which she then transferred into her sole account.