Liquidator launches legal case over collapse of German property scheme

MUT 103 raised cash for German Property Group and owes €41m to investors

The liquidator of an Irish company that raised cash for a German property business company that collapsed in 2020 owing investors here €107 million has launched legal proceedings against several companies and people linked to the ill-fated scheme.

The case centres on the collapse of German Property Group (GPG), formerly known as the Dolphin Trust, which raised Irish debt investment through local intermediaries. The €107 million in loans from investors was supposedly secured on a parcel of land in Berlin, which was valued in a report commissioned by an Irish intermediary, Wealth Options Trustees Limited (WOTL), at about €85 million. WOTL helped to run the Irish fundraising for Dolphin.

Myles Kirby, the liquidator for MUT 103, one of Wealth Option’s vehicles for raising the loans, has suggested that the Irish investors actually had recourse to about only 10 per cent of the lands, and not the full parcel. MUT, which owes €41 million to its investors, is now in liquidation following GPG’s collapse, and Mr Kirby is turning to the courts seeking cash for creditors.

MUT 103 this week filed a case against local Irish intermediary WOTL and another linked company, Wealth Options Capital, as well as Wealth Options directors Éanna McCloskey and Brian Flynn. It is also suing the estate of a deceased Wealth Options director.

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MUT is also suing RE Administration, a company in liquidation that is linked to Dolphin, and its directors, Cormac Smith and Marc Reilly, and also Lisa Marie Keane, who worked there.

WOTL this week said it could not comment directly on a live legal case but it said the Wealth Options companies and their directors “will be robustly defending all of the allegations that have been made against them”. WOTL previously told The Irish Times it “relied on professional advisers in Germany at all times”.

Anthony Fitzpatrick, the liquidator of RE Administration, confirmed on Friday that it had been served with legal papers. He said Mr Kirby "appears to have concluded that RE Administration has a case to answer in this regard when it has not".

Mr Fitzpatrick also said MUT’s investors had “advanced monies, in the absence of any State guarantee or regulation, in the expectation of recovering unrealistic investment returns of circa 20 per cent plus per annum”.

In a note to creditors this week, Mr Kirby said MUT in its case will seek damages over alleged breach of contract, negligence, unjust enrichment and breach of duty. He said it would also seek further damages for “negligent misrepresentation”. He said filing the case was the “first step” in a process that could take “many months or longer” before it is ready to go to trial.

Dolphin MUT 116, another Irish vehicle set up to raise cash for the scheme by WOTL, is also in liquidation, with KPMG appointed to oversee it. This entity is not a party to MUT 103's legal action.

In all, GPG collapsed after raising €1.5 billion from investors in locations including Ireland, Britain and Asia. It was set up by businessman Charles Smethurst in 2008.

Mark Paul

Mark Paul

Mark Paul is Business Affairs Correspondent of The Irish Times. He also writes the Caveat column