Siteserv co-founder Niall McFadden “did not disclose assets” to a key court official in his bankruptcy process, Mr Justice Brian Cregan said in report on the sale of the company to Denis O’Brien.
The report also found Mr McFadden did not disclose to the Revenue or pay tax on a €480,000 “finder’s fee” which Mr O’Brien paid him in the form of shares for bringing him the Siteserv investment opportunity.
In addition, Mr McFadden was found to have concealed assets from his creditor the State-owned Irish Bank Resolution Corporation (IBRC), which had obtained a court judgment against him for €15 million.
Despite that judgment, the judge said Mr McFadden concealed the €480,000 finder’s fee and his shares in Mr O’Brien’s vehicle Cathkin from IBRC. Mr McFadden was found to have arranged for the transfer of his Cathkin shares to a company called Boundary Equity – in substance to his wife – to “conceal them, and to divert them” from IBRC.
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Official assignee
There was no comment on the report on Wednesday evening from Mr McFadden, whose bankruptcy started in June 2013, the year after the Siteserv sale, and ended in June 2016.
The inquiry’s findings in relation to his bankruptcy centre on disclosures to the official assignee in the process, an officer of the courts to whom the ownership of the bankrupt’s property is transferred. The assignee is an independent statutory officer who administers a bankrupt’s estate and is answerable to the High Court.
According to the report, Mr McFadden transferred the shares he received in Cathkin Holdings to his wife for no consideration in December 2012. Such shares had a value of €480,000 just over six months previously.
“At that time, petitions for his bankruptcy had been presented to the courts by IBRC and by National Irish Bank and were then still outstanding. He did so in the knowledge that, if he could not come to an arrangement with his creditors, he could be adjudicated a bankrupt,” the judge said
Debt negotiations
“Mr McFadden did not disclose his 400 Cathkin Holdings shares, or his transfer of them to his wife, to the official assignee at any time.”
Mr McFadden’s debt negotiations with IBRC and National Irish Bank to avoid bankruptcy had continued without resolution throughout 2012, the report said.
“In November 2011, National Irish Bank brought an application before the UK courts to challenge Mr McFadden’s assertion that his centre of main interests was in the UK. According to Mr McFadden’s evidence, after a number of days of hearings in January 2013, Mr McFadden conceded that his centre of main interests was not in the UK.”
As a result, IBRC and National Irish Bank went ahead with applications to have him adjudicated a bankrupt in Ireland. Mr McFadden sought and obtained leave from the High Court in Ireland to put a proposed arrangement to his creditors, a proposal underwritten by Mr O’Brien.
However, the government in February 2013 appointed special liquidators to IBRC while his proposed arrangement was being considered. “The special liquidators refused to accept the proposed settlement.”
