A High Court judge today granted interim orders freezing assets owned or controlled by the five adult children of bankrupt businesman Sean Quinn, his nephew Peter Darragh Quinn and two sons-in-law - Stephen Kelly and Niall McPartland - below €50 million each except for living expenses of €2,000.
The orders were sought by Irish Bank Resolution Corporation (formerly Anglo) on grounds it believes the Quinns have already "misappropriated" assets from their international property group (IPG) as part of a scheme to frustrate the bank's efforts to recover loans of up to €2.8 billion against them and were prepared to dispose of those assets.
The family may have continued to take actions implementing that scheme during High Court contempt proceedings against some of them, on which judgment was reserved last month, the bank claims. Transactions had occurred unexpectedly, without notice and were ongoing with one such transaction occurring while the contempt motion was at hearing in May last, it alleged.
Richard Woodhouse of IBRC said in an affdavit it was not possible to put a precise value on the assets removed to date by the Quinns or others acting on their behalf but he believed the value of the assets either removed or at risk of removal amounted to about €400 million.
It had emerged from the contempt proceedings a firm in the United Arab Emirates, Senat Legal Consultancy FZ LLC was co-ordinating litigation in all jurisdictions on behalf of the Quinn family, he added. Senat Legal, which specialises in global litigation and its sister company Senat FZC, both based in Dubai, "appeared central to the scheme".
He said the bank had obtained new information in the past few months demonstrating the extent to which steps have been taken by the family and their agents to appropriate assets in which IBRC has an interest.
This evidence included a distinct pattern of shares in valuable Russian IPG companies being transferred to off-shore companies in recent months and Peter Darragh Quinn's evidence in the contempt proceedings he requested purchase of eight off-shore shelf companies for the "Quinn family" at the request of the family's Russian advisers, the law firm A&B.
Other information included a Northern Ireland High Court ruling last month setting aside a purported assignment by Sean Quinn of a $45.2 million debt, he said.
It was also believed money assets had been taken from IPG companies and a receiver appointed by IBRC over Quinn Investments Sweden, one of the group's main holding companies, had not obtained any income from any of those companies, he said.
In making the assets restraint orders, Mr Justice Kelly said the allegations against the defendants were of the "utmost seriousness" and, given the "alleged deviousness", he considered the court should intervene and make the orders sought.
What was most unusual and perhaps unique about the bank's ex parte (one side only represented) application was its basis. The bank alleged the defendants were guilty of the most serious behaviur and may have continued to take actions in implemenaiton of the scheme to put assets beyond its reach even during the contempt proceedings.
Ms Justice Elizabeth Dunne last month reserved judgment on those contempt proceedings where the bank alleges contempt by Sean Quinnn Senior, his son Sean and nephew Peter Darragh Quinn of court orders of June and July 2011 restraining them moving assets beyond its reach.
Evidence given by the Quinn respondents in that hearing and various other matters had caused the bank much concern, Mr Justice Kelly was told earlier by Paul Gallagher SC, for IBRC. The bank wanted the asset freezing orders over concern it will prove to be the "victim" of the alleged scheme.
The bank said it was now apparent "very significant" transactions had taken place since the High Court made orders in June and July 2011 restraining the Quinns taking steps to strip assets from the IPG.
Valuable shares had also been assigned at a significant undervalue in recent weeks to a third party in spite of the contempt motion and this showed the determination to proceed with the scheme so that, if IBRC successfully defends the family's action against it arguing they are not liable for some €2.8bn loans, there would be nothing left in the IPG with which to enforce any judgment obtained, Mr Woodhouse said in his 85-page affidavit.
Mr Justice Kelly noted the bank claimed, in order to imeplement the alleged scheme, the Quinn defendants were prepared to swear false affidavits, give misleading and inaccurate information in correspondence, falsify documents, generate bogus artibral awards, inflate debts so as to create corporate insolvency of companies of which they were directors, purchase off-shore companies for the purpose of holding assets and conceal their ownership, transfer shares for no consideration or at a significant undervalue.
After a near four hour hearing, Mr Justice Kelly granted the interim orders restraining reduction of assets below €50m except for living expenses of €2,000 up to Wednesday next. The judge directed the Quinn defendants could apply to vary the orders at 24 hours notice.
The judge will deal on Monday next with the banks application to fast-track to the Comemrcial Court its proceedings aimed at restraining dissipation of assets within the IPG.
He agreed to join Quinn Investment Sweden, one of the main holding companies in the IPG which was placed into bankruptcy on IBRC's application last July, plus the bankruptcy receiver, Leif Baecklund, as plaintiffs in the case with IBRC. QIS was being jouined as a plaintiff on grounds the alleged scheme had substantially deprived QIS of its assets, the bank said.
The judge also agreed to join a number of companies, including off-shore companies based in Belize and Panama, as defendants to the proceedings. The bank claims the Quinn defendants appeared to have conspired with the corporate defendants to implemnent the asset-stripping scheme.
Earlier, at the request of Mr Gallagher, the judge ordered the fact of the making of the application could not be notifified or publicised to any other party until it had finished. A solicitor for the Quinns was in court during the application.
Mr Gallagher said the restraint on notification/publicaiton was sought out of concern, if they were aware the application was being made, the defendants might take steps to frustrate its intention. The judge said he would impose the restriction under the court's inherent jurisdiction to protect its orders and in the knowledge assets could be transferred now by pressing a button or clicking a mouse.
In the contempt proceedings, the three Quinn respondents have denied they acted in contempt of the court orders of June and July 2011. While steps were taken to prevent the bank moving against assets, no steps in furtherance of that were taken after the orders were made, they have argued.
In separate proceedings, Mrs Patricia Quinn and her five children, who have owned the Quinn companies since 2002, claim they are not liable for loans of some €2.8 billion made by Anglo to Quinn companies because those loans were unlawfully made to prop up the bank's share price.
