Dunne and Killilea ask US court to fire trustee in their bankruptcy case

Irish property developer Sean Dunne and his ex-wife Gayle Killilea are asking a US court to fire the trustee in their long-running American bankruptcy case.

In separate court filings the one-time couple accused bankruptcy trustee Richard Coan and his lawyers of tanking a settlement reached in January in order to increase their law firm’s fees. In addition to Mr Coan’s removal, Mr Dunne and Ms Killilea are seeking an investigation into the his firm’s fees, which they allege total more than $8 million (€7.4m).

“The trustee is more concerned with legitimising his $8 million in fees and generating further fees than he is in generating this global settlement,” Mr Dunne claims. “The court should remove him for bad faith, refusing to settle and seeking to extend unnecessary litigation for only his lawyers’ or his own benefit.”

In a scathing response via the court, trustee attorney Timothy Miltenberger strongly denied the allegations, calling Mr. Dunne’s motion “fundamentally premised on a wholesale distortion of the facts” and “wholly devoid of any basis”.

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He called for the motion to be dismissed and struck from the record.

“I think it’s clear that this is just continued attempts at delay and avoidance of their responsibilities to the bankruptcy statute and the verdict and now judgment,” Thomas Curran, another trustee lawyer, told The Irish Times. “There was never any settlement between the estate and Ms Killilea and Mr Dunne, although the trustee did participate in months and months of negotiations.”

Asked about Mr Dunne’s assertion that the trustee has earned more than $8 million from the nearly decade-old case, Mr Curran said: “I don’t know where that figure comes from, so I’m not going to speculate.”

Nearly three years ago a jury sitting in Connecticut, where the couple moved after Mr Dunne’s property empire collapsed, found he had fraudulently transferred millions of euro in assets to his then-wife to prevent their seizure by creditors. The jury ordered Ms Killilea to surrender €18.1 million to the trustee, a figure that has since ballooned with interest to €19.5 million.

After years of on-again-off-again settlement talks, the former couple earlier this year appealed the 2019 verdict to the US Court of Appeals for the Second Circuit. In February, Ms. Killilea complied with a court order to provide another $5.5 million in assets as security while her appeal, which is likely to take some time, plays out.

Debts

In the motions from Mr Dunne and Ms Killilea to remove the trustee, the couple say that they met in January in London with Alan Stewart, the chief legal counsel for the National Asset Management Agency (Nama) to try to hammer out a settlement. Nama and Ulster Bank are the primary holders of Mr Dunne’s massive debts.

In their filings Mr Dunne and Ms Killilea allege that they made a deal with Mr Stewart and the other parties only to see Mr Coan’s lawyers undermine it when it became clear the US trial judge was about to make rulings favourable to them.

But in a response filed in US bankruptcy court, Nama’s and Ulster Bank’s US lawyer denied that the parties had reached an agreement.

Attorney Henry P Baer Jr wrote that Mr Dunne’s memo “is misleading and inaccurate”.

“No global settlement was reached between the parties,” Mr Baer wrote.

Shortly before Ms Killilea filed her document, her US bankruptcy attorney withdrew from the case. She has since hired a new one. Ms Killilea declined to comment on the latest filings.

It is unclear if Mr Dunne has a US bankruptcy attorney at this time.