Hibernia Reit replies in Dunne bankruptcy row

Gayle Killilea’s pursuit of the company as part of her husband’s case is being strongly resisted, writes Ronald Quinlan

A LEGAL bid by Gayle Killilea to draw Hibernia Reit into the controversy surrounding her husband, Sean Dunne’s US bankruptcy proceedings is facing strong resistance. Lawyers for the company’s senior advisor, Frank Kenny, described her demand that he be called to give evidence and produce documents for the case as a “fishing expedition”.

The comment is included in an affidavit filed by Kenny’s legal team last Monday, calling on the US bankruptcy court in Connecticut to quash Killilea’s request that he be subpoenaed on the grounds the affairs of Hibernia Reit have “no relevance whatsoever to the issues” involved in Dunne’s bankruptcy proceedings.

Kenny was responding to a formal notice of issuance filed by Killilea with the court on January 12 last in which she had sought all documents, communications and correspondence that mention an email Kenny sent to Hibernia Reit chief executive Kevin Nowlan on July 17, 2011. The potential significance of the email stems from the fact that it was sent at a time when Nowlan was working as a portfolio manager for Nama and handling the affairs of Killilea’s husband, Sean Dunne.

In that email — a copy of which was appended to the papers submitted by Killilea to the court — Kenny told Nowlan that: “I hear that our friend SD [Sean Dunne] is bidding for a [$]12m site on Long Island Sound in Rye, NY, to build two or three houses. This would be a third project — got to be running a $20/30m residential business at this point. Tough on those left unpaid in Dublin!!”

Nama moved against Dunne two days later on July 19, 2011, with a demand for the repayment within two days of loans amounting to €296.7m.

In his affidavit, Kenny referred to the email he had sent Nowlan in 2011, saying: “I do not have any responsive documents to this request as Mr Nowlan never responded… and I have not other documents concerning or mentioning the email”.

Elsewhere in her submission to the US bankruptcy court, Killilea sought “all documents, communications and correspondence that concern, mention, were sent to, or were received from: Sean Dunne, Nama, Hibernia Reit or Kevin Nowlan. She also looked for the delivery of copies of any documents, communications or correspondence that might exist relating to Sean Dunne’s former property assets including: Riverside IV; a prime site at City Quay; Hume House and AIB bank headquarters in Ballsbridge; 72-80 North Wall Quay; 76 Sir John Rogerson’s Quay, and the former Jury’s and Berkeley Court hotel lands in Ballsbridge.

She also looked for copies of any correspondence or communications relating to Sean Dunne’s former assets between Nama, Hibernia Reit or Kevin Nowlan with a number of parties including US private equity giants Cerberus, Blackstone and Oak Tree Capital. All three companies acquired a significant number of prime properties in Dublin’s central business district — where Dunne’s portfolio was largely concentrated — from Nama and other financial institutions at knockdown prices in the depths of the recession.

Referring to the difficulties compliance with these requests would present, Kenny said that as he had “sent and received thousands of emails” to Nowlan, and to his father, William Nowlan, during the seven-year period Killilea wanted to explore, it would be “extremely difficult” to “search and retrieve and produce” emails relating to what he termed “unlimited subject matter”.

“I do not believe that I have in my possession anything that would be necessary or relevant to the litigation,” he said.