Dolphin Trust-linked firm’s liquidator targets former investment distributor

Irish investors only entitled to 10% of Germany site assigned as main security for loans

The liquidator of a Kildare company linked to a Germany property group that collapsed in 2020, resulting in losses of up to €107 million for Irish investors, is planning legal action against a firm once involved in distributing the investment in the Republic.

This would also pave the way for a series of further potential lawsuits, the liquidator told investors in an update issued in recent days and seen by The Irish Times.

Hanover-based German Property Group (GPG), formerly known as Dolphin Trust, collapsed after taking €1.5 billion from investors in the Republic, the UK, Asia and elsewhere after it was set up by businessman Charles Smethurst in 2008.

Irish investments, by way of loans, were channelled to the German group through two special-purpose vehicles (SPVs) – MUT 103 and Dolphin MUT 116 – set up in Naas, Co Kildare, in 2011-2012 by Wealth Options Trustees Ltd (WOTL), of the same address. Both SPVs were put into liquidation last year.

Myles Kirby, the liquidator of MUT 103, told credits in his update report this week that his initial planned action is against a Cork-based company called RE Administration, formerly Dolphin IG, which once distributed the investment product and was put into solvent liquidation in late 2019.

High Court approval is needed in order for a firm in liquidation to take a case against another in liquidation. The matter is due before the court on Monday.

Other parties

Mr Kirby is also planning proceedings against other parties. He previously informed investors in January that he had issued letters threatening legal action to 13 different parties.

“Broadly speaking the letters have identified the numerous failings of the various parties for which I will be seeking, amongst other things, damages for negligence, breach of duty and misrepresentation, unjust enrichment and/or to hold individuals personally liable for the debts and liabilities of the company,” he said in the report.

Mr Kirby did not outline his specific case against RE Administration. The liquidator of RE Administration, Anthony Fitzpatrick of Fitzpatrick O’Dwyer & Co, told The Irish Times on Friday that the company does not have a case to answer and that he “shall defend all aspects of his action vigorously in due course”.

Retail investors are owned €41 million of capital, plus interest, by MUT 103.

Mr Kirby said that he and the liquidators of Dolphin MUT 103, which was responsible for €66 million of pension savings, are currently taking legal advice on “potential causes of action against various parties in Germany, including professional advisers”.

Valuation report

The main German property assigned as security for the €107 million of the Irish loans was a 230,000sq m site in the town of Zehdenick, near Berlin. WOTL obtained a valuation report on the site in 2019 that assigned a value of €86.9 million to it.

However, it has now emerged that the Irish SPVs really only had 10 per cent of the Zehdenick lands – or three plots – assigned to them, according to Mr Kirby, adding that there “will be a huge shortfall” between the assigned value and what is recoverable for investors.

WOTL told the Irish Times that it “relied on professional advisers in Germany at all times” and highlighted a section in Mr Kirby’s report that said that it is assisting the liquidator as he weighs action in Germany.

GPG Redress Group, an action group of 40 financial broker firms whose clients were among more than 1,800 Irish investors hit by GPG’s collapse, said that it is “deeply concerned by the valuation of the Zehdenick site and the apparent use of a valuation of the entire site when [the Irish SPVs] had only three plots assigned to it”.

Joe Brennan

Joe Brennan

Joe Brennan is Markets Correspondent of The Irish Times