Mediation fails to produce settlement in Sean Dunne US bankruptcy case

Jury found developer had fraudulently transferred millions in assets to Gayle Killilea

Sean Dunne pictured during his US bankruptcy case in May. Photograph: Douglas Healey

Sean Dunne pictured during his US bankruptcy case in May. Photograph: Douglas Healey

 

Legal combat in Sean Dunne’s US bankruptcy case appears set to resume after more than 10 hours of mediation last week failed to produce a settlement.

“We mediated the case over a day and half,” said Thomas Curran, a lawyer for the plaintiff, the trustee in Mr Dunne’s American bankruptcy. “The case did not settle.”

Mr Curran said the moratorium on most filings imposed by US district judge Jeffrey Meyer during the mediation is set to expire, and he expects the two sides to resume briefing on various issues.

Mr Dunne’s lawyer, Brian Spears, declined to comment. Peter Nolin, lawyer for Mr Dunne’s wife, Gayle Killilea, did not return a message seeking comment.

A jury ruled last month that Mr Dunne had fraudulently transferred millions of euros in assets to Ms Killilea to evade his creditors and ordered her to pay the trustee €18.1 million. The trustee wants the money to pay off Mr Dunne’s creditors left holding the bag after his once massive property empire collapsed in the late 2000s. Collectively, they are owed more than €800 million, according to court papers.

At Judge Meyer’s urging, the two sides declared a truce in the verdict’s wake and agreed to mediation supervised by US magistrate judge Robert Spector.

Judge Spector held sessions lasting six hours and 45 minutes on July 17th and three hours and 30 minutes the following day, according to court records, but the effort proved fruitless, Mr Curran said.

Judge Spector has scheduled another session for early August.

Upped the ante

Days before the mediation sessions, the bankruptcy trustee significantly upped the ante in the case by asking Judge Meyer to find Ms Killilea was unjustly enriched – an allegation in the lawsuit not decided by the jury – and order her to pay an additional €25.2 million to the bankruptcy estate. That would raise the total award to €45.3 million.

The trial at the federal courthouse in New Haven, Connecticut stretched over three weeks, during which the plaintiff alleged that Mr Dunne had systemically shed tens of millions of euros in assets, turning them over to Ms Killilea, to evade creditors. The pair, who each spent days in the witness box, denied the allegations, saying he gave her cash, property and other assets to secure her independence and the future of their children.

In the end, the jury agreed that many assets, including Walford, Ireland’s most expensive home, had been fraudulently transferred, but not all those alleged by the plaintiff.