Seán Dunne accused of trying to ‘derail’ settlement of cases

The court official overseeing the US bankruptcy of Seán Dunne will ask a court to sanction the Irish developer for allegedly trying to "derail" the imminent settlement of his long-running cases in the US and Ireland.

The trustee is asking the court that presided over Mr Dunne’s civil trial to rule on the sanction request.

"The trustee contends that the debtor has failed to co-operate with the trustee by deliberately interfering in his settlement efforts in connection with both this action and the official assignee's pending litigation in Ireland," the trustee, Richard Coan, said in his latest filing.

The filing goes on to say that Mr Dunne’s pending trial in Ireland has been stayed until Tuesday “on the basis of the Irish parties’ settlement conditional agreement”.

The trustee's request comes after a US bankruptcy court judge in New York declined to hold a hearing on the motion, saying that it properly belonged before US district court in New Haven, Connecticut, where Mr Dunne's civil trial took place last year.

Thwart creditors

The jury in that trial found Mr Dunne had fraudulently transferred assets to his ex-wife Gayle Killilea to thwart creditors and ordered her to pay €18.1 million to the trustee.

The trustee’s job is to distribute Mr Dunne’s remaining assets to his creditors, who are owed hundreds of millions of euro from the collapse of his property empire in the 2008 financial crisis.

In the latest twist of the years-long legal battle, Mr Dunne’s lawyer Luke McGrath filed a motion in a New York state court late last week seeking an injunction blocking Ms Killilea’s use of €13.5 million from the sale of Walford, Ireland’s most expensive home, to settle the case.

The motion was against John Dunne, Mr Dunne's grown son from his first marriage who lives in New York city and is the director of Yesreb, the entity that holds the money.

Mr McGrath argued that that some of the proceeds of the sale are owed to a trust for his client’s four minor children from his marriage to Ms Killilea.

‘Cynical ploy’

The trustee dismissed Seán Dunne’s claim as “a cynical ploy” and accused him of “blatant forum shopping”. His case has been adjudicated for years in the US district court and the US bankruptcy court in Connecticut.

The trustee’s lawyers succeeded earlier this week in removing the motion from the Manhattan court and are now seeking to have it brought to Connecticut.

The trustee is now seeking a hearing – the subject of his most recent filing – that could result in sanctions against Seán Dunne for what he says is the bankrupt developer’s attempt “to derail the settlement in violation of his statutory duties to co-operate with the trustee”.

Mr McGrath and lawyers for the trustee and John Dunne did not return messages requesting comment on Friday.