Killilea denied new trial in long-running bankruptcy case

A US judge this week denied the request of Gayle Killilea, ex-wife of former property developer Sean Dunne, for a new trial and ordered her to provide sufficient assets to pay what with interest has ballooned to a €19.4 million judgment from the couple's 2019 American bankruptcy trial.

US district judge Jeffrey Meyer gave Ms Killilea until February 23rd to hand over to the US bankruptcy trustee as security $12.5 million from the sale of Walford, once Ireland's most expensive home, while she considers an appeal. He also ordered her to sell a US home worth an estimated $4.5 million and hand the proceeds to the trustee, as well as provide him $5.56 million in cash or a bond and $360,000 from another US bankruptcy.

Seize the assets

If Ms Killilea fails to meet the deadline, the trustee may move to seize the assets, Judge Meyer ruled.

Adding to Ms Killilea’s woes, her longtime lawyers in the case dropped her late last month, alleging she failed to pay them, according to documents filed in US District Court in Connecticut. It is unclear whether or not she has hired new ones.

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Reached by phone, Ms. Killilea declined to comment on the judge’s rulings and her lawyers’ decision to withdraw from the case.

Trustee lawyer Thomas Curran hailed the judge's decisions as a major step forward in the case, which has been stalled since the jury's June 2019 verdict.

”It’s great news because it validates to a great extent what we have been seeking in this case and that is not only to recover a judgment but also to provide a path by which we can actually recover the monies in that judgment,” Mr Curran said.

He is prepared to pursue Ms Killilea’s assets worldwide to pay the judgment, he added. “We’re going to go after all the assets we know of.”

Mr Dunne, once one of Ireland’s richest men, moved to the US following the collapse of his property business in the 2008 financial crisis. He later declared bankruptcy. At a 2019 trial, a US jury found Mr Dunne had fraudulently transferred big chunks of his wealth to Ms Killilea, his then wife, to shield it from creditors and ordered her to forfeit €18.1 million to the trustee.

Interest has increased the award, which would be used to pay Mr Dunne’s creditors, to €19.4 million, Judge Meyer said in his ruling this week.

Since the verdict, the case has been tied up in court with intermittent negotiations that failed to produce a settlement. Shortly after the trial, it emerged that Ms Killilea and Mr Dunne had divorced.

Judge Meyer denied Mr Dunne’s request for a new trial last summer, prompting him to appeal to the US court of appeals for the second circuit in New York, where the case is pending. Now that her request for a new trial has also been denied, Ms Killilea may do the same.

Unpaid fees

In court papers withdrawing as Ms Killilea's lawyer, Peter Nolin, who led her defence team at the trial, said that his firm has been speaking to her and her company about unpaid fees for a year.

“In recent months, there’s been a significant breakdown in communications between counsel and these defendants on this issue,” Mr Nolin wrote. “Despite multiple emails and at least one phone conference call to resolve the issue over the last three months, fees remain unpaid.”