Nama and Ulster Bank lend $3m to pursue Sean Dunne in US courts

Nama and Ulster Bank have given $3.1 million (€2.7 million) in loans to the US bankruptcy trustee pursuing legal action against bankrupt Irish developer Sean Dunne and his former wife Gayle Killilea, according to American court records.

Nama and Ulster Bank are seeking to recover tens of millions of euro that Mr Dunne, who moved with his wife to the US after his property empire collapsed and declared bankruptcy there in 2013, owes them.

In June, Nama and Ulster Bank won a major victory in the years-long legal battle when a US jury ruled that Mr Dunne had fraudulently transferred assets to Ms Killilea to hide them from creditors and ordered her to pay €18.1 million.

Documents filed last month show that Nama and Ulster Bank agreed to provide $1.225 million via a non-interest bearing loan, to Richard Coan, Mr Dunne's US bankruptcy trustee.

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This follows four previous loans – one of $160,000, two for $250,000 each, and another for $1.25 million. These date from 2014 onwards.

The loans are to cover legal and other fees, and must be approved by a US bankruptcy judge. The latest loan of $1.225 million is awaiting approval.

The documents show that Nama has covered about 53 per cent of the cost – about $1.6 million – with Ulster Bank paying the balance.

With the case far from over, the fees are likely to continue to pile up. The trial judge must still rule on a variety of outstanding issues, including whether Mr Dunne’s transfers to Ms Killilea constituted unjust enrichment, which could push the amount she must pay as high as €43 million.

Ms Killilea, meanwhile, retains the right to appeal, which would drag the case out even longer and likely require the hiring of expensive attorneys specialising in appeals.

In addition, the estate has in recent weeks received permission from the bankruptcy court to hire lawyers in Britain, South Africa and Cyprus to pursue the couple's far flung assets – including the Cypriot special use vehicle used to sell Walford, Ireland's most expensive home – and secure them to pay the judgment.

Also receiving substantial funds is Curran Antonelli, the law firm of Thomas Curran, a litigation specialist hired by the trustee to try the case.

According to a court filing last month, Curran Antonelli’s bill was $1.58 million until the end of June for 5,857.4 hours of “professional services”. This money will come from the funds paid to Mr Coan’s law firm.

In addition to the fees it has received from Nama and Ulster Bank, the trustee’s law firm is entitled under US law to a percentage of any assets it recovers. The percentage is on a sliding scale that bottoms out at 3 per cent for gains of $1 million or more.

That means Mr Coan’s firm could receive about €540,000 of the €18.1 million judgment won in June, a number that will rise if the judge increases the award.

The trustee’s law firm, Nama and Ulster Bank all declined to comment on the loans.

American bankruptcy courts assign a trustee to each case, generally a lawyer who administers the estate, secures any remaining assets and distributes them to creditors. The trustee is paid from the estate, per the court’s approval.

Because there were insufficient funds in the estate to cover the cost of litigation, Mr Dunne’s biggest creditors, Nama and Ulster Bank, agreed to finance Mr Coan’s efforts to seize assets, court records state.

A Nama official testified in May that the organisation holds €333 million of his more than €800 million in debt.

Nama and Ulster Bank have done so through zero-interest loans – one each in 2014, 2016 and 2018 and two so far this year. The money is paid to Mr Coan’s law firm, which uses it to pay various litigation costs.