McKillen bid to dismiss bankruptcy summons over alleged €2.1m debt set to be dismissed

Judge indicated he would allow lender's bankruptcy petition against Mr McKillen to proceed

Judge said on Monday the 'direction of travel' was that he would reject the application to dismiss a summons seeking the bankruptcy of Mr McKillen, issued by lender Herbert Street Finance. File picture

Hotelier Paddy McKillen Jr’s bid to set aside a bankruptcy summons over an alleged €2.1bn debt is set to be rejected, a judge has indicated.

Mr Justice Liam Kennedy on Monday said the “direction of travel” was that he would reject the application to dismiss a summons seeking the bankruptcy of Mr McKillen, issued by lender Herbert Street Finance (HSF). 

The judge indicated he would allow HSF’s bankruptcy petition against Mr McKillen to proceed.

The judge told barristers Niall Ó hUiginn, for HSF, and Keith Farry, for Mr McKillen, he would issue a full written judgment on the set-aside application in the coming seven days. He adjourned the case to October.

Issued in January, the summons, a first step in bankruptcy proceedings, alleged Mr McKillen would have committed an act of bankruptcy unless he paid an alleged debt of €2.1m, or applied to have the summons dismissed on grounds he was not indebted to HSF in any sum, or only in the sum of €20,000.

HSF claimed the €2.1m debt arose on foot of Mr McKillen covenanting to pay on demand the obligations of his Cool Dust Ltd firm to HSF, up to a maximum of €3m.

The lender claimed sums of €2.3m were received in part payment of Cool Dust’s obligations, but about €2.14m remains due and owing, plus daily interest.

Mr McKillen denies he is indebted to HSF in any sum exceeding €20,000.

In the set-aside application, heard in May, Mr McKillen's lawyers argued a court must set aside a bankruptcy summons if the debtor raises a real and substantial issue to be tried in plenary proceedings.

Mr McKillen raised several issues, including claims the alleged debt was overstated, and the loan was illegal because it was allegedly not a commercial loan made by a registered credit institution, but one extended to Mr McKillen personally.

Lawyers for HSF submitted there was no evidence to support Mr McKillen's claim the loan was illegal.

In a separate lawsuit issued in March, Mr McKillen, of Torquay Road, Foxrock, Dublin, is disputing liability for the alleged €2.1m debt. He says a December 2022 facility agreement between Cool Dust, himself and HSF is void and unenforceable, and no sum is due by him to HSF.

HSF is contesting those proceedings. The case was admitted to the fast-track commercial division of the High Court in May.