Cantillon: US court ruling puts Killilea and Dunne on back foot

The long-running game of chess that is the litigation around the Irish and American bankruptcies of property developer Sean Dunne received much needed clarity with last week's ruling by a US judge.

Dunne and his wife Gayle Killilea have been contesting legal actions on both sides of the Atlantic, as well as in South Africa. The main challenge now rests in Ireland where they are trying to stop attempts to recover multimillion euro assets transferred from husband to wife.

Killilea's latest legal move – arguing that the "automatic stay" in place to protect debtors in US bankruptcy cases blocked Dunne's Irish bankruptcy official Chris Lehane in his efforts to recover assets – was shot down by Connecticut bankruptcy judge Alan Shiff last Friday.

He did not hold back in his 18-page ruling while ordering that the automatic stay was not in effect. He has paved the way for Lehane, the official assignee, to continue his legal pursuit of the transferred assets.

The ruling puts Lehane in the driving seat, with Dunne’s US bankruptcy trustee sitting behind him and cooperating, and the Connecticut court having given official backing to their coordinated action.

The judge said that even though Killilea had asked for “an effective, efficient and economical resolution” of the Irish and US bankruptcy cases, she had “apparently abandoned her stated initiative as she now seeks to thwart the trustee’s efforts to achieve that objective”.

Put another way, her attorney was “employing a tactic which is frustrating and delaying the efficient and expeditious administration of this case . . . and the administration of the Irish bankruptcy proceeding”.

An attorney for Nama, which accounts for a chunk of Dunne’s €700 million debts, said that Killilea’s position on the automatic stay was “absurd.”

The next move now falls to Lehane in Ireland. After this ruling, the momentum rests with him.