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Archive for the ‘Hotels’ Category

General
The reserved judgment in the Paddy McKillen
appeal hearing in London is due any day now
Monday 6th May 2013
Holiday in Ireland and UK
Tuesday 7th May 2013
(CSO) Vehicles licensed for the first time April 2013
(CSO) Mthly Services Index Mar 2013 (Provl) Feb 2013 (Final)
Troika review scheduled to conclude
Agriculture Oireachtas committee – Coillte sale
Wednesday 8th May 2013
(CSO) Crops and Livestock Survey June 2012
Finance Oireachtas committee – Pre-ECOFIN Min Finance
Sean Dunne creditors meeting Connecticut
Thursday 9th May 2013
(CSO) Consumer Price Index April 2013
Friday 10th May 2013
Central Bank provisional banking figures April 2013

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I believe the revelation of the overall value of Sean Dunne’s creditors last night – put at USD 942m on his filing – took some by surprise, with the expectation the total would have been closer to the USD 500m lower limit in the range Sean had indicated in his initial filing on 29th March 2013. Sean has even omitted a liability when he notes the amount owing to KPMG as “unknown”.

This is a brief blogpost on the creditors. Firstly this is the list sorted in descending order. We had previously known of a €164m (USD 215m) judgment against Sean in favour of Ulster Bank, so it was a surprise to see Sean listing his Number 1 debtor as Ulster Bank owed USD 394,334,536.  It was also surprising to see another NAMA developer, O’Flynn Construction listed as being owed USD 102,061,490; however, it is understood that this loan was in de facto provided by Irish Nationwide Building Society and the loan has since been transferred to NAMA, so it is NOT O’Flynn Construction which is the owed the money. Alas, NAMA won’t comment on individual loans.

SDCreditorsSortedName

If we group the loans according to assignment, we see that NAMA is in fact Sean Dunne’s largest creditor with USD 445,323,628 owed, comprising original loans from IBRC of USD 188,216,722 and Bank of Ireland of 151,158,009 and O’Flynn Construction of USD 102,061,490. Bank of Scotland’s loans appear to have been all assigned to Certus though a company incorporated last November 2012 called Risali Limited appears to have acquired USD 16,975,267 of those loans.

SDCreditorsAssigned

If we group the loans according to type, we see that an astonishing USD 612,217,333 is “unsecured non priority” with only USD 280,215,656 secured. All of the banks appear to have been guilty of advancing loans not secured on specific property, which must surely call into question further the behavior of Irish banks during the boom.

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There is deep concern on here at the special liquidation of IBRC which will see some €16bn of assets disposed of, or transferred to NAMA over the next six months* The disposal of the assets is taking place behind a curtain of secrecy and Minister for Finance Michael Noonan refuses to extend NAMA’s anti-lobbying rules to the IBRC liquidation, which means what stands between these assets and shenanigans is the professionalism of the special liquidator, Kieran Wallace of KPMG. KPMG has appointed UBS and PwC to value the loans but Minister Noonan refuses to publish the request for procurement citing commercial confidentiality. We don’t even know what the assets IBRC would have had in February 2013, because Minister Noonan refuses to publish accounts for the second half of 2012, so the latest reporting we have on IBRC is for the six months ended 30th June 2012.

We are still apparently at the phase of the IBRC liquidation when existing borrowers at IBRC can refinance their loans; and when this phase is over, the loans will be offered to the market at no less than the valuation placed on the loans by PwC and UBS. So, right now, IBRC’s borrowers are scrambling about to refinance their loans, we believe at 100% of their par values, though Minister Noonan refused to confirm last week if all refinanced loans were repaid 100%, citing commercial confidentiality.

And the most vociferous of the IBRC borrowers by a country mile has been developer and businessman Paddy McKillen who gets a platform in today’s Irish Times – here and here – to attack the IBRC special liquidator, the Department of Finance and NAMA. Paddy is reported to have offered to pay €180m upfront for loans with a par value of €800m, with the remainder repaid in full by 2016. Trouble is that IBRC is being wound down now, and by 2016 should be just a bad national memory. So it is unclear what Paddy expects IBRC to do with his loans between now and 2016 – he has previously fought a battle against NAMA to stop his loans being taken over by the Agency, so does he expect IBRC to be kept open specially for him?

The Special Liquidator at IBRC is reported by Paddy in the Irish Times to have declined the €180m upfront offer so Paddy has a platform to have a whine and make all sorts of claims but the Special Liquidator’s position is not reported. A request for comment was made to Kieran Wallace this morning but there was no response at time of writing, and the likelihood is that no comment will be forthcoming on a specific loan anyway.

You will be hard-pressed to find any greater display of chutzpah in the media today than when Paddy is quoted as saying : “One billion euro of that amount [€2.1bn] has already been repaid to the State at full value” Paddy is seemingly referring to his borrowings from Irish banks. But, this presumably includes the €800m “repaid” after NAMA sold €800m of loans in the Maybourne group, to the Barclay brothers. Even though he eventually lost, Paddy, memorably, went to court in the UK to stop that transfer! Paddy was asked to comment on the €1bn repayment and for an outline of his repayment plans between now and 2016, but at time of writing there has not yet been a response.

What we all know is that some of Paddy’s IBRC loans relate to his stake in the Maybourne set of three luxury London hotels, Claridge’s, the Berkeley and the Connaught. And the Barclay brothers who own 28% of Maybourne, and have received support from Derek Quinlan’s 36%, have made no secret of their desire to acquire Paddy’s 36% stake or at least dilute him to such an extent that his influence as a minority shareholder would be nugatory. It has been reported that the Barclays would be prepared to pay in excess of the market value for Paddy’s Maybourne loans, and no doubt, Paddy will use all his considerable acumen to prevent that from happening.

But negotiating through the national press with a Special Liquidator that is presumably constrained in his ability to comment? Paddy has a right to refinance his loans right now at 100% and no-one, not Minister Noonan, Secretary General Moran, Special Liquidator Kieran Wallace nor NAMA’s Brendan McDonagh can stop Paddy in doing that. Meantime, they all have the duty to maximize returns from these assets.

* The original plan was for most of the unsold IBRC loans to be transferred to NAMA in August 2013, but press reporting has since suggested this has slipped, and Minister for Finance Michael Noonan has refused to provide an updated estimate.

UPDATE: 5th May, 2013. In the Sunday Independent today, Tom Lyons provides additional information on Paddy’s negotiations. He claims that the offer to refinance the €180m of loans was at “a relatively minor single digit write down”. A 9% write down would equate to about €16m, but we don’t know the “single digit” so it might conceivably have been €1.8m, which is still significant to a man who reportedly sought approval of what the Sunday Times last week called an “emergency loan” from IBRC in October 2012 of GBP 5-5.9m (€5.9-€7m). The Sunday Times indicates that although the facility was approved, it was never drawn down by Paddy who had other options. So there are mixed messages from the incident with suggestions that Paddy was in a corner financially, but at the same time, Paddy had options and didn’t need draw down an approved loan.

Tom writes in the Sindo today that the refinancing offer was “provisionally agreed” with IBRC in December 2012 but that the Special Liquidator of IBRC, Kieran Wallace has subsequently been holding firm to the position that refinancing be at 100% until such time that the loans are independently valued and offered to the market. Despite Minister Noonan’s refusal to confirm this was the case two weeks ago, citing commercial confidentiality, I also understand that it is KPMG’s position that loans be refinanced at 100% only in the refinancing window which will expire shortly.

Eyebrows might be raised in some quarters at the claim in Tom’s report that Paddy’s 36-7% stake in Coroin, the company that owns, the three hotels might be worth €200m. Even after the rights issue late last year, that looks ambitious for what remains, when you strip away the razzamatazz surrounding three lumps of performing bricks and mortar in central London, a heavily indebted company producing relatively modest profits.

 

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SDSoFASummary

They were filed in Connecticut late last night, and are available here – at 53 pages, might take a moment to download. The figures below are all in United States Dollars (USD) though Sean says in his statement that he used an exchange rate with the euro of USD 1.2798 and with sterling of USD 1.51. The value of real estate is, according to the statement, the same as was given to NAMA in December 2010 and has not been updated. Sean may sue other people, and he alerts us to that fact, “despite his reasonable efforts to identify all known assets, the Debtor may not have set forth all of his causes of action or potential causes of action against third parties as assets in his Schedules and Statements.”

Assets

Sean says that his USD 41m of “real property” against which there is a total of USD 745m of secured claims. What a sobering statement. The property includes a site at 72-80 North Wall Quay in Dublin currently worth less than USD 1m but with a secured claim of USD 282m, that’s a 99.7% decline from the secured amount. The main property comprising the USD 41m is Ouragh at 20a Shrewsbury Road valued at USD 10m and said to be his principal private residence – Certus is said to have a USD 15m secured claim on this property; land and sites at Charlesland in Wicklow of USD 8m, the Charles Retail and Leisure Centre of USD 5m and four apartments at Hollybrook on Brighton Road in Foxrock of USD 3m.

Sean’s non “real property” of USD 14m includes USD 960 of cash; most of the bank accounts are frozen, but interestingly, he has a measly USD 15 in People’s United Bank, the bank which the trustee has sought a subpoena to question. There’s a USD 1m pension pot at DCD Builders. He has listed a USD 12m claim against Kildare County Council as his main, non-real estate asset. This is a claim jointly with Sean Mulryan against Kildare CC and Sean describes it as a “50% Interest in Newbridge Inner Relief Road (counter claim against Kildare County Council Levies) constructed in lieu of levies for Whitewater Shopping Center”. Dublin solicitors, Beauchamps are said to owe Sean USD 53,572 in “overpaid legal fees”. There’s an insurance claim outstanding in respect of Sean’s home on Shrewsbury Road.

The vast majority of what would have been considered Sean’s assets, his developments, have now mostly been placed under the control of his creditors and are not included in the above, though they are itemized. Surprising not to see property in the UK or elsewhere, but perhaps it has all been disposed of as part of Sean’s efforts to repay his creditors.

Liabilities

The biggies are Ulster Bank owed USD 394m; NAMA owed USD 340m; Michael O’Flynn’s O’Flynn Construction owed USD 102m [UPDATE 4th May 2013] though it is understood that this loan was in fact provided by Irish Nationwide and has since been assigned to NAMA; Sean owes USD 50m to parties identified only as “A” and “B” resulting from judgments of the court in matters heard in camera, probably family law matters; Kildare County Council is owed USD 12m but there is a counterclaim against this;

Although not “biggies”, seems top-tier Dublin solicitors Arthur Cox are owed USD 1.5m; Bruce Shaw is owed a relatively small USD 12,798; the IDA is owed USD 140,778;  it is “unknown” how much is owed to KPMG – this is the crowd who audited AIB, Irish Nationwide and Permanent TSB during the boom, who oversaw the balls-up at the Lotto draw recently, who believe IBRC’s loans are worth about 60c in the euro and who, we learned last week, have not yet raised a single fee note for their work on IBRC.

Ballymore’s Sean Mulryan is claimed to be a co-debtor on some of Sean’s obligations.

Income and expenses

SDIncome

Sean declares USD 808,000 of income in 2011 and USD 204,000 in 2012 and USD 66,000 in 2013. This includes sales of land, rental income and the USD 30,000 sale of a car in February 2013 to Mahoney Motors in Dublin – there is a Denis Mahony Toyota, Lexus and Mercedes group in Dublin, and maybe Sean means this, but it is not quite clear as Sean spells it Mahoney with an “e” and the group trades as “Denis Mahony”

Elsewhere Sean says he is now employed by Mountbrook USA as a project manager with monthly gross income of USD 8,333.33. In addition he shows his estimated monthly gross rental receipts at USD 13,670 which equals a mortgage payment of USD 13,670 shown under his monthly expenses. His itemized monthly expenses mostly comprise that mortgage payment, rent of USD 3,600 and life assurance of USD 1,007. His total monthly income is shown as USD 22,003 and his expenses at USD 21,807

Law suits

Sean has to list current and recent law suits in his filing, and we learn that two defamation proceedings dating from 2006 against Associated Newspapers Limited, publishers of the Daily Mail and Mail on Sunday, are pending. There is also a case by Irishman, Sean Doyle against the Dunnes in a New York court, that case is in arbitration.

Where Sean lives

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Sean was required to list his place address of residence for the past three years, and lists four addresses, one in Switzerland, one in Dublin and two in Connecticut – above. Interesting that he indicates that his residence at 526 Indian Field Road was January 2011 through to March 2013, but Sean was only required to provide addresses UP TO his filing for bankruptcy on 29th March 2013. Recent indications are that the Dunnes have now vacated this property.

Oddities

Sean is required to provide “bookkeepers and accountants” kept records in the past two years and Sean merely lists two in a manner which doesn’t fully identify them “J Ryan Ireland” and “R Connolly Ireland” who are both described as providing services “periodically during the past two years”

Sean’s award-winning bankruptcy attorney, James Berman, says that he has already been paid USD 15,000 by Sean.

We cannot see much of the detail of who Sean co-owns some real estate property with, because the spreadsheet submitted to the court truncates descriptions. That will need be rectified.

Sean says his loans – just some of his loans from later on – from Bank of Scotland Ireland have been sold to a company called “Risali Limited” and if that is an Irish incorporated company, then it is the company incorporated in November 2012 whose directors are Wendy Merrigan and Rory Williams (43). According to the creditors listing included in the statement, he now owes USD 16.2m to Risali secured on property on Serpentine Avenue in Ballsbridge and a company called Breccia Limited.

The statement of financial affairs is electronically signed by Sean on 3rd May 2013, and his signing is “under penalty of perjury” with penalties of fines up to USD 500,000 or imprisonment for up to five years, or both”. There is a creditors meeting scheduled for 8th May 2013, and we should learn soon afterwards if issues are raised with the bankruptcy, though it should be stressed that it is for the trustee to decide how the bankruptcy will proceed.

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SDThisIsHowItEnds

This evening, we finally have Sean Dunne’s various statements of financial affairs. There is something deeply sad about exposing the financial minutiae of a well-lived life, and the information is brought to you here because Sean owes NAMA, and by extension the Irish state, €185m. Comments will be strictly policed, remember this is a man’s life, or at least the financial aspect of it.

The statements are lengthy at 53 pages and are brought to you here.

In summary, Sean apparently estimates his liabilities at USD 942,204,885 and his assets at USD 55,214,829 though on some summaries there are different figures.

Sean has USD 960 of cash on hand and his bank accounts disclosed have all been frozen. Amongst his listed assets are  “Daily Mail Defamation Claims” – note the plural – and overpaid fees to Dublin solicitors Beauchamps.

There will be analysis here tomorrow – there is a LOT of information in the statement.

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SDHearingNoticeDiscussDocs

Seems not a day goes by in the Sean Dunne bankruptcy affair without some new development. Today, Sean’s award-winning bankruptcy lawyer has succeeded in getting a hearing scheduled for 21st May 2013 to discuss the following “Motion to Extend Deadline to File Schedules or Provide Required Information Filed by James Berman on behalf of Sean Dunne, Debtor. (Attachments: # 1 Proposed Order) (Berman, James)”

This doesn’t make a lot of sense. Sean obtained a second extension to file his financial information and that expires tomorrow 2nd May 2013. So it seems that we mightn’t get the statement of affairs tomorrow as expected. Also there is no attached proposed order in today’s filings.

But the judge has scheduled a hearing for 21st May 2013.

There was supposed to be a creditors hearing on [CORRECTED] 8th May 2013, so the status of that is uncertain now also, as the creditors will need to have sight of Sean’s statement of affairs.

The filing today is available here.

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Three weeks ago, NAMA started moving against a Northern Ireland property developer, the Kennedy Group, with administrators appointed to a range of assets including the Ramada Portrush Hotel. There was an unusual reaction that we aren’t used to on this side of the Border with three DUP politicians, Gregory Campbell, Ian Paisley junior and finance minister Sammy Wilson expressing concern about the foreclosures.

This morning, the BBC reports that seven additional properties have placed in receivership at the behest of NAMA. The companies in the group affect and properties are listed below:

ACI Developments Limited – “four parcels of land close to the Junction One centre in Antrim”

Waterside Crescent Limited – “two retail warehouses on Strand Road in Derry”

Kennedy Investments Limited – “adjoining sites on The Crescent in Portstewart which have planning permission to build 24 apartments”

When the foreclosures took place earlier this month, the political outcry seemed to be placated with a prompt NAMA announcement of a €11m investment in a DUP-stronghold in the south-east of Belfast.

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PeoplesBankR2004

News this evening from Connecticut that the bankruptcy trustee managing Sean Dunne’s bankruptcy has sought two new subpoenas compelling a US bank and a surveyor to submit to questioning in relation to Sean’s affairs.

The bankruptcy trustee, Richard Coan and his law firm, Coan, Lewendon, Gulliver and Miltenberger have asked the court to grant them a so-called Rule 2004 Examination which, if granted, will allow them to question two parties, who they claim, have information relevant to the assets of Sean and/or transfers and/or other information.

AndySmyth

The two separate parties are Andy Smyth – pictured above – a surveyor with the New York firm, Bruce Shaw and secondly, a bank, People’s United Bank in Connecticut. The subpoena applications are here and here. The judge has not yet approved them but he did approve a subpoena application which compels companies in the Credit Suisse group to submit to questioning.

Neither People’s United Bank nor Andy Smyth are shown as creditors on Sean’s filings.

UPDATE: 1st May, 2013. Bruce Shaw, the Irish headquartered quantity surveying and property services firm is on Sean’s creditors list. Sean who is himself a quantity surveyor, has a long history with Bruce Shaw. It is understood he went to college with Michael Scollard and Derry Scully who worked at Bruce Shaw. In fact Michael Scollard left Bruce Shaw to work as project manager on Sean’s ultimately-disastrous Ballsbridge development – “Knightsbridge in D2”.  Bruce Shaw was very active in the boom, being Ireland’s largest quantity surveying firm and was particularly active in the development of Dublin’s docklands.

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SD2ndExtension

For those of you twiddling your thumbs awaiting Sean Dunne’s statement of financial affairs, you won’t have much longer to wait. Sean has sought, and has been granted, a second extension to the deadline to file his financial statements, and the revised deadline is this coming Thursday, 2nd May 2013.

In the application for the second extension – the first extension expired last Saturday 27th April, 2013 – Sean’s award-winning lawyer repeats the grounds cited for the first extension and seeks the extension “due to the extent and complexity of Mr. Dunne’s historical financial affairs and the necessity to review and translate the information already assembled intothe form required by the Schedules”

The documents that Sean should now file later this week are “Chapter 7 Means Test, Schedules of Assets and Liabilities, Attorney Disclosure Statement, Statement of Financial Affairs, Debtors Declaration Page, Statistical Summary of Schedules, Summary of Schedules, and Statement of Intent”

The Bankruptcy court has today agreed the new extension.  The application and order are available here, and an extract is shown above.

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When the KNWL helicopter visited 526 Indian Field Road, Greenwich, Connecticut CT 06830 on 17th April, 2013, there didn’t appear to be anyone at home, and subsequent enquiries indicated that the Dunnes had upped-sticks and moved to another house in the neighbourhood.

WheresSean

It seems though that the bankruptcy court still believes the Dunnes to be resident at 526 Indian Field Road because that is the address that notice was sent by the bankruptcy court yesterday (Sunday, 28th April 2013). The notice is partially reproduced above and the full notice is available here.

We don’t know what the notice issued by the court was. We are awaiting Sean’s statement of financial affairs which was supposed to have been filed with the court by last Saturday 27th April, 2013 after an extension was previously obtained. As of 3pm Dublin time today, there is no such filing available from the US court service, PACER.

The certificate of notice which was filed on the US court service today also indicates that several parties including NAMA and Sean’s bankruptcy lawyer were sent unspecified notices.

This is potentially important because the US courts tend to be strict about addresses provided in bankruptcy cases, though there doesn’t appear to be any doubt that on 29th March 2013, when Sean originally filed for bankruptcy he was still at 526 Indian Field Road, but where is he now?

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