Gayle Killilea, the wife of property developer Seán Dunne, has objected to an application in the US courts for relief that would help her husband’s Irish bankruptcy official recover assets from the couple.
In the latest development in long-running legal actions bridging bankruptcies in two countries and litigation in a third, Ms Killilea has asked a US court not to terminate the “automatic stay” that protects debtors from actions taken by creditors to recover their debts.
New York lawyer Alec Ostrow, for the former gossip columnist, argued that granting such relief would subject Ms Killilea to legal actions in several countries and would be "completely unfair" to her as she may be "bound in the second trial by an adverse result in the first". The attorney asked the court not to authorise "such blatantly abusive litigation".
Mr Dunne filed for bankruptcy in the US in 2013 and was made bankrupt in Ireland four months later. He has waived his right in the US courts to a discharge, leaving him liable for $942 million – about €700 million at the time he filed for bankruptcy – in debts.
Ms Killilea wants to block the court officer overseeing her husband's bankruptcy in Ireland, official assignee Christopher Lehane, from suing her to recover alleged fraudulent transfers from Mr Dunne.
He has said that in 2005 he agreed to transfer €100 million, a fifth of his fortune, to his wife in exchange for “love and affection”, but that he was solvent at the time of the transfers.
Ms Killilea's lawyer argued in a filing to the Connecticut bankruptcy court on Monday that Mr Lehane had, "in complete disregard" for any need for authority from the US bankruptcy court, begun "fraudulent transfer litigation" in Ireland with similar "satellite" litigation against a hotel beneficially owned by her in South Africa.
Her attorney said to grant express authority to Mr Lehane would be “to condone and retroactively validate” his litigation tactics. The move would subject Ms Killilea to “litigation in multiple countries over the same underlying facts, with the attendant extra enormous and financially ruinous burden and expense”, argued Mr Ostrow.
Mr Dunne's American bankruptcy trustee Rich Coan, who has also taken an alleged fraudulent transfer case, has argued that the automatic stay was no longer in effect because the developer had waived his right to a discharge and Ms Killilea had no standing in the bankruptcy.