Anglo will not figure in Drumm's US hearing
THE BANKRUPTCY trial of David Drumm next year will not deal with matters relating to his conduct as chief executive of Anglo Irish Bank following an agreement reached with the bank and his US bankruptcy trustee.
In a new filing in the Boston court, the bank (now Irish Bank Resolution Corporation) and trustee agreed to exclude from Mr Drumm’s trial details of his role in transactions still under investigation by the Garda and the Director of Corporate Enforcement.
These include the concealment of Seán FitzPatrick’s loans, other loans to Anglo directors and the Maple 10 deal in July 2008, when the bank assembled 10 long-standing customers to buy a 10 per cent stake in the bank from businessman Seán Quinn to prop up the share price at a critical time.
Next year’s trial will decide whether Mr Drumm should be discharged from bankruptcy.
This week’s agreement means Mr Drumm’s trial will not deal with the directors’ loans or any of the controversial transactions in the months leading to the collapse of Anglo in January 2009.
A document filed in the Boston courts says that the parties have agreed that “any specific conduct or practices of Drumm or Anglo Irish Bank Corporation plc that negatively affected the bank’s financial condition” will fall under “excluded evidence” in the trial.
The parties have, however, accepted for the purposes of the trial that in September 2008 Anglo faced “enormous liquidity pressures, a plummeting share price, the prospect of government intervention and potentially the loss of its independence”.
The sides agreed to limit the scope of the trial, which is due to be heard in January, so it can proceed more quickly and efficiently by focusing solely on Mr Drumm’s finances and his conduct during the bankruptcy proceedings.
In one of two lawsuits taken against Mr Drumm, the bank and trustee have made a litany of allegations against him over his conduct as chief executive from 2005 and 2008. The case may still be heard if they fail to block his discharge from bankruptcy.
The nationalised bank has claimed in the now frozen lawsuit that it is entitled to unquantified damages from Mr Drumm over his conduct as chief executive.
IBRC had argued that “his well-established pattern of concealment, deception, manipulation, falsehood and intentionally fraudulent behaviour” – during both his time as Anglo chief executive and in the bankruptcy case – denied him a right to a fresh financial start.
Mr Drumm has rejected the allegations and is vehemently defending the actions against him.
In a further development, lawyers and financial advisers acting for the trustee, Boston lawyer Kathleen Dwyer, have applied to the court to be paid fees totalling $628,000 (€500,000) that would come from cash generated from the sale of Mr Drumm’s assets.
Ms Dwyer’s Irish solicitors Lavelle Coleman are seeking fees of $68,000 and expenses of $22,000 for representing her in the proceedings taken by Anglo against Mr Drumm in the Dublin courts.
CRG Partners, the New York financial advisers, have sought fees of $68,000. Anglo had at one point tried to replace Ms Dwyer as trustee with CRG but they later reached a compromise where she agreed to use the firm’s services.
IBRC has not disclosed how much it has incurred in fees challenging Mr Drumm’s bankruptcy.
Mr Drumm owes IBRC €8.5 million and has overall debts of more than €10 million. In 2010 he filed for bankruptcy in the US, where he has lived since 2009, after failing to reach a debt settlement with the State-owned bank.
If his discharge from bankruptcy is blocked, he will remain liable for outstanding debts after his assets are sold and any future income or assets could be seized by Anglo or his other creditors.