The liquidators of the former Anglo Irish Bank are "flouting the duties imposed on them" and have "harmed and continue to harm" developer Paddy McKillen and his company Clarendon Properties, new US court documents allege.
The documents filed last week in the Bankruptcy Court for the District of Delaware on behalf of Mr McKillen, his business partner Tony Leonard and Clarendon Properties, state that the liquidators of Anglo, which later became Irish Bank Resolution Corporation (IBRC), have violated the statutory and common-law duties of care they owe the developer.
In the submission, the liquidators are accused of attempting to “perpetuate and enforce an illegal obligation” that is “manifestly contrary to US public policy”.
In the documents, representatives for Mr McKillen claim IBRC’s liquidators are seeking to claim back the €45 million loaned to the developer in 2008 as part of a transaction to reduce the substantial stake that businessman Seán Quinn had built up in Anglo.
Mr McKillen, who claims the decision to go after him over the loan is part of a vendetta, is seeking to have the former Anglo’s bankruptcy protection overturned in the US.
In the recently-filed legal documents, he claims he was pressured by representatives of the lender into agreeing to become one of the so-called Maple 10, a group of investors who bought shares in 2008 under an arrangement to reduce Mr Quinn’s shareholding. Anglo later became the State-owned IBRC.
Mr McKillen owed the lender about €2 billion at the time he agreed to be loaned €45 million to buy shares in the lender.
‘Beholden’
“Acutely aware that he was beholden to the bank, and that he and Clarendon had substantial loans coming due, McKillen felt enormously pressured to acquiesce to the request and to enter into the transaction,” the submission states.
It goes on to say the developer felt he was held “over a barrel,” although no explicit threat was made to him by Anglo’s management. It also claims he was unaware of any illegality associated with the transaction, and that he expressed alarm when it emerged the shares had not been sold shortly after the transaction was completed.
The submission suggests that the outing of him and other Maple 10 participants was extremely damaging to the developer and led him to miss out on a number of big business deals.
Details of Mr McKillen's loan in the bank's July 2008 Anglo share transaction initially emerged in his High Court challenge against the National Asset Management Agency to stop the transfer of debts totalling €2.1 billion from a number of financial institutions moving toxic loans to the State agency.
“In terms of the impact on McKillen, the direct result of his public association with the Maple 10 was a barrage of negative publicity and a whispering campaign in which he was identified with and perceived to be associated with the bad actors within Anglo,” the legal submission said.
Mr McKillen is looking to have the former lender’s bankruptcy protection lifted in the US. He is also seeking damages.
