Anglo Irish Bank has secured a temporary court injunction restraining the wife of its former chief executive David Drumm from transferring the couple’s former home in Co Dublin from her sole ownership back to the joint ownership of her husband and herself.
Anglo chief executive Mike Aynsley said he believed the intention of the re-transfer, proposed in a letter from Lorraine Drumm’s solicitors to the bank last Monday night, was to put the property at Abington, Malahide, “beyond reach” of Anglo and the US Trustee in Bankruptcy following Mr Drumm’s unexpected decision last Thursday to file for bankruptcy in Massachusetts.
Lawyers for Mrs Drumm denied that claim and said the re-transfer was proposed in an effort to settle Anglo’s court case against the couple in which Anglo claims the original May 2009 decision of Mr Drumm to transfer his half share of Abington into his wife’s name, leaving her the sole owner, was a fraud on creditors.
Solicitors for Mrs Drumm also wrote last Monday the proceedings over the May 2009 transfer should never have been taken on grounds Anglo had agreed not to seek to attach family assets of Mr Drumm. Anglo disputes Abington is a family home as the Drumms have lived in Cape Cod for over a year.
Anglo's action against Mr Drumm over unpaid loans of some €8 million was fixed for hearing at the Commercial Court next Tuesday, with proceedings over the Malahide property to be heard immediately afterwards.
However, that trial date was cast in doubt after Mr Drumm's unexpected filing for voluntary bankruptcy. Today, Mr Justice Peter Kelly dealt with several issues concerning the proceedings here.
The judge said it was "highly unsatisfactory" that one side in this case, Mr Drumm, through his voluntary act in declaring bankruptcy in another jurisdiction, could disrupt proceedings here.
The "extraordinary fact" was Mr Drumm is an Irish citizen and Anglo is an Irish bank, the debt at the centre of the proceedings was incurred here and Mr Drumm's contract was governed by Irish law, the judge said.
He also noted the proceedings here were fixed last May for hearing next Tuesday and both sides had also consented to exchanges of legal documents.
However, by Mr Drumm's "simple act" of applying to the US courts and because Anglo has a presence in the US, there was a concern any act by Anglo here could be seen as interference with the jurisdiction of the US trustee.
There is no reciprocal arrangement between here and Massachusetts in relation to bankruptcy matters, the judge noted.
However, he had personal experience of acting for US trustees when he was a barrister and the usual practice was they would apply to the Irish courts to have the bankruptcy regime recognised here. No such application had been made to date.
The judge said he was bearing in mind Anglo's concern that going ahead with the case against Mr Drumm here next Tuesday could have consequences for the bank.
However, he would also not let the proceedings here lie in "a state of torpor or be sterilised", and he would fix Tuesday for the hearing of any application by the US Trustee.
If there was no appearance, he did not see any huge impediment to the case proceeding shortly afterwards and the trustee should be under no illusion as to what was going to happen. She had an opportunity now to assert whatever entitlement she wished.
In the interim, the judge said he would stand down next Tuesday’s hearing.
Earlier, Paul Sreenan SC, for Anglo, had told the court his side believed Mr Drumm's decision to file for bankruptcy was timed to have the "maximum disruption" here.
He said Mr Drumm was required by US law to undertake a course in financial literacy prior to filing for bankruptcy and he had done so on October 7th last.
Mr Sreenan said his side was very concerned about Mrs Drumm's offer on Monday night last to re-transfer the Abington property in Malahide into the joint ownership of her husband and herself.
He said the couple were moving the property around like a deck of cards to suit themselves and Anglo was very concerned, as set out in an affidavit of its chief executive Mike Aynlsey, this was intended to frustrate the bankruptcy and the claims of Mr Drumm's creditors. There appeared to be an element of pre-conception in what was happening, he added.
Gary McCarthy, for Mrs Drumm, said his client had not considered the legal consequences under US law of the proposal to re-transfer and had not expected Anglo to oppose her offer, which was made in an attempt to settle the case over the transfer.
Counsel said his side had been on the phone to Mrs Drumm during the proceedings and he wished to state there was no intention by Mrs Drumm to put assets beyond the reach of the trustee. He believed the proceedings by Anglo over the Malahide property transfer could be settled very quickly, counsel added.
Mr Justice Kelly said he was satisfied he should grant the interim injunction sought by Anglo restraining the re-transfer and he returned that matter to next Tuesday. If the case over the property transfer was settled prior to then, the court could be notified, he added.
Mr Drumm, who resigned in December 2008 as Anglo chief executive, is being pursued by Anglo for €8 million over unpaid loans but he has claimed the demand breached loan agreements and has also counter-claimed his employment was not validly terminated in early 2009.
He also claimed Anglo owes him some €2,620,695 in salary, pension and deferred bonus payments and sought damages, including damages for "mental distress".
