FitzPatrick declared bankrupt at his own request

 

FORMER ANGLO Irish Bank chairman Seán FitzPatrick was adjudicated a bankrupt by the High Court yesterday at his own request just days after opposition from Anglo Irish Bank ensured the collapse of his proposed settlement deal with creditors.

The official assignee in bankruptcy, Chris Lehane, will now deal with Mr FitzPatrick’s creditors, who are owed some €150 million. His assets are estimated to be worth some €50 million, including investments of some €45.7 million, and some €1.23 million in accounts in various financial institutions.

He is joint owner of six properties, including his family home and another house in Greystones, Co Wicklow; a house in Bray, Co Wicklow, and apartments in Marbella, Spain; at Smithfield Market, Dublin and Killiney Court, Killiney. Only the Marbella apartment is not subject to a mortgage.

A proof of debt process by the official assignee, not yet complete, has estimated the level of Mr FitzPatrick’s unsecured creditors at €70,292,885. He is also appealing some €2 million in tax liabilities.

Anglo Irish Bank is the largest creditor of its former chairman. It says it is owed some €110 million and its counsel, Paul Gardiner SC, yesterday rejected claims that it would have done better under the proposed settlement deal.

Because the bank did not support the deal, Mr FitzPatrick could not secure the necessary 60 per cent support of creditors and that led to his petitioning for bankruptcy.

A motion by the bank to end court protection for Mr FitzPatrick did not proceed yesterday because he was adjudged bankrupt. Mr Gardiner said that motion had been brought to ensure the bankruptcy petition went ahead. He said the bank had made clear on March 12th that it was rejecting an informal scheme advanced by Mr FitzPatrick and the formal scheme advanced since then was “no more favourable” to the bank. It was not the case that the bank would get a better outcome from a scheme than bankruptcy, he said.

The bank has some 85 per cent of Mr FitzPatrick’s debt, he added.

Mark Sanfey SC, for Mr FitzPatrick, said he would not argue at this stage about something that was “academic”. Mr Justice Brian McGovern said he would not allow the court to be used as a forum for disputes between the sides. If there were things to be said, they should be said in another forum, the judge said.

Mr FitzPatrick claimed his creditors would have got a dividend more than twice as large under his scheme than under bankruptcy.

His scheme included selling his half share in his family home (the home has been valued at €1.5 million) and making available to creditors his half share of total pension assets of €3.4 million.

Mr FitzPatrick was adjudicated bankrupt by Mr Justice McGovern following a 12-minute hearing in a packed High Court 11 yesterday. Mr FitzPatrick did not attend. Mr Sanfey said he had asked the court last Friday to lift the protection order on his client given his intention to move the petition for bankruptcy.

The context in which the petition was brought arose after the court granted Mr FitzPatrick’s request on March 15th last for a protection order, counsel said.

Mr FitzPatrick had taken the view he should provide full disclosure and try to secure the most favourable realisation of his assets for creditors. An independent forensic accountant’s report had been prepared setting out all assets and liabilities and a draft scheme had been put before creditors last Wednesday. The creditors were given two different overviews of what would happen if Mr FitzPatrick was declared bankrupt or if a scheme was agreed and there was a “significantly better outcome” under bankruptcy. Several creditors had spoken in support of the proposed scheme.

Mr Sanfey said that Anglo Irish Bank did not speak at the meeting and had previously said it would not treat with any proposal from Mr FitzPatrick, no matter what that was. Mr FitzPatrick’s side met the bank after the creditors meeting. It said it would not support the scheme and Mr FitzPatrick then decided to “bow to the inevitable”. He was now applying to be adjudicated bankrupt to ensure a “fair and even-handed” distribution of his estate.

Mr Sanfey said there was proof before the court that Mr FitzPatrick cannot meet his liabilities and he met the criteria to be adjudicated bankrupt.

Mr Justice McGovern said he would make an order adjudging Mr FitzPatrick a bankrupt and return the matter to July 26th. The judge noted that Mr FitzPatrick’s undertaking not to deal with his assets in any way was spent as of yesterday, as the official assignee had taken over.

Creditors also have the option of seeking to have a trustee appointed to deal with the bankruptcy. Denis McDonald SC, for the official assignee, said he wanted to engage counsel and a financial adviser and the judge made those orders.