Developer Sean Dunne's latest court filing is "a baseless ploy" aimed at sinking settlement of his long-running US bankruptcy case, and he should be sanctioned for it, his bankruptcy trustee says in court papers filed Monday.
“Your client is intentionally interfering with the trustee’s attempt to liquidate his judgment, which is based on your client’s actual fraud,” wrote trustee attorney Timothy Miltenberger in an angry letter to Mr Dunne’s lawyer, Luke McGrath.
The letter was included as an attachment to the trustee’s motion to intervene in the case.
Mr McGrath declined comment on Monday.
Late last week, Mr McGrath sought an injunction in a New York state court seeking to block use of proceeds from the sale of Walford, Ireland's most expensive home, to settle Mr Dunne's bankruptcy case.
Mr Dunne claimed that the entity holding the proceeds – €13.5 million, according to the trustee's court filing – owes money to a trust for his four sons from his marriage to his ex-wife Gayle Killilea. The children "will be robbed of benefits owed them" if the funds are used to settle the case, Mr McGrath says in a court filing.
In his motion to intervene, the trustee calls Sean Dunne’s claim that his children from his second marriage are owed money from the sale “demonstrably false”.
“He is not ‘protecting ‘ his children,” the filing says. “He is interfering with the trustee for his personal gain.”
Mr Dunne is seeking the injunction against John Dunne, his grown son from a previous marriage. John Dunne, who lives in New York City, is the director of Yesreb, which holds the Walford funds in escrow.
Mr Miltenberger, meanwhile, accused Mr McGrath of "blatant forum shopping" for filing his injunction request in a New York state court instead of at US Bankruptcy Court or US District Court in Connecticut where the case has been litigated for years.
“The debtor knows that no court familiar with him and his conduct . . . would believe his cynical claim to represent his minor children,” the trustee wrote in court papers field Monday after outlining numerous instances of what he called improper conduct by Mr Dunne. “Thus the debtor has filed an action in the Supreme Court of New York to avoid proceeding in the district court or any other court familiar with him.”
John Dunne and the trustee filed paperwork on Monday removing the injunction request from state court and sending it to US District Court in Manhattan.
As a result, a hearing Monday morning in a New York state court ended within minutes with the judge saying she no longer had jurisdiction over the case. Sean Dunne’s lawyer may request the federal court return the matter to state court.
Asked outside the courtroom on Monday whether this latest legal row is a proxy fight or indicative of a deeper rift between father and son, both men’s lawyers declined comment.
The trustee, meanwhile, opened a second front, filing a motion at US Bankruptcy Court in Connecticut asking the court to sanction Sean Dunne for "acting in bad faith to thwart the settlement conference being conducted by the District Court and obstruct the trustee."
In June, a jury in New Haven, Connecticut, found that Sean Dunne had fraudulently transferred millions of euros in assets to Ms Killilea to shield them from creditors and ordered her to pay the trustee €18.1 million. John Dunne is also a defendant in the case. The trustee would use the money to pay Sean Dunne's creditors, including the NAMA and Ulster Bank, who have bankrolled the case.
A judge in the case called off a January 3rd hearing on the trustee’s motion for a prejudgment remedy – an order to set aside assets to pay the judgment – because “the parties had reached a settlement,” according to a trustee court filing.
The trustee cited Sean Dunne’s testimony at last year’s trial as proof that funds form the 2016 sale of Walford were never intended to benefit his children with Ms Killilea. Sean Dunne testified that the proceeds of the sale belong to his ex-wife because of loans she had made to Yesreb, court papers filed by the trustee said.
