Sean Dunne’s US bankruptcy case to remain in Connecticut

A Federal judge in New York City handed the trustee in Sean Dunne’s US bankruptcy a series of victories this week, paving the way for a possible settlement of the long-running case.

US district court judge Analisa Torres denied a motion by Mr Dunne’s lawyer to have his request for an injunction blocking use of escrow funds to settle the case heard in state court in New York. Instead, she granted the trustee’s request to send it to US court in Connecticut, where Mr Dunne’s bankruptcy has played out for the last seven years.

In doing so, the judge short-circuited what the trustee characterised as a blatant attempt by Mr Dunne and his lawyer to find a court unfamiliar with the complicated case to increase their chances of success.

Trustee attorney Timothy Miltenberger said Wednesday he is pleased with the judge’s ruling, which also granted the trustee’s request to enter the case as a party.

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“We’re happy that the case is coming to Connecticut,” Mr Miltenberger said.

Through his office, Luke McGrath, Mr Dunne’s attorney in the proceeding, declined comment.

Settle

Almost a year ago, a US jury found that Mr Dunne, once one of Ireland’s richest men, had fraudulently transferred millions of euro in assets to his then-wife Gayle Killilea to shield them from creditors. The jury ordered Ms Killilea, who is now divorced from Mr Dunne, to pay the trustee $18.1 million (€16.4 million) for distribution to Mr Dunne’s creditors.

In late January, Mr Dunne sought to stop Ms Killilea from using about $13.5 million (€12.3 million) from the sale of Walford, Ireland’s most expensive home, to settle the case. He claimed that the funds were intended for the benefit of his four minor children from his marriage to Ms Killilea.

Instead of seeking an injunction in US court in Connecticut, where the case was heard, his lawyer filed in New York state court. His lawyer did so because John Dunne, his grown son from his first marriage, controls the special use vehicle holding the funds and lives in Manhattan.

The action led Mr Milttenberger to accuse Sean Dunne and his lawyer of “blatant forum shopping”.

The trustee and John Dunne responded by getting the matter transferred to US court in Manhattan. Sean Dunne’s lawyer tried to get the case sent back, but the judge declined, instead granting John Dunne’s and the trustee’s request to send it to Connecticut for adjudication.

“The Connecticut district court and the bankruptcy court have more than seven years of experience with the Sean Dunne bankruptcy and related actions, including ongoing settlement discussions and tentative agreements reached under the guidance of a magistrate judge there,” the judge wrote in her decision.

Mr Miltenberger said it is unclear if the action will be heard in US district court, where last year’s trial took place, or in US bankruptcy court.