Sean Quinn, once Ireland’s richest man, was declared bankrupt on Monday, Bloomberg reported. Quinn, whose fortune was valued at around $6 billion (4.7 billion euros) by Forbes magazine in 2008, owes the bank almost 2.9 billion euros ($3.5 billion).
Quinn, 64, didn’t contest the bankruptcy petition brought by Irish Bank Resolution Corp. (IBRC), formerly Anglo Irish Bank, the lender at the centre of Ireland’s property crash.
Here’s how it happened…
Quinn started in construction, and went on to become a real estate magnate. However, his trouble came when he became involved with the Anglo Irish Bank Corp.
The Anglo Irish Bank Corp. was the biggest lender to Irish construction magnates during the property boom in the early 2000s. Quinn and his family pumped more than $1.3 billion (one billion euros) into the bank, according to the AP. The Quinns soon held a 28 per cent stake in the bank, which they hid from other stockholders.
Quinn says that as the bank’s shares fell, it encouraged his family to borrow hundreds of millions specifically to buy more Anglo stock, a charge the bank denies.
The property bubble burst in 2008, and Ireland nationalized the bank (renaming it the Irish Bank Resolution Corp.) in 2009 to prevent a collapse. This, in effect, wiped out the Quinn’s investment, the AP reported. The bailout cost 29 billion euros, forcing the Irish government to negotiate a loan with the EU and the IMF last year.
Quinn had initially filed for voluntary bankruptcy in Northern Ireland. However, Judge Dunne overturned the ruling, saying that Quinn’s main centre of business was in the Republic of Ireland — a charge he denies — rather than in Northern Ireland, where the law allows a bankrupt to return to business after 12 months.
The bankruptcy judgment will bring a thorough court investigation of Quinn’s capital and assets, which IBRC hopes it can reclaim from Quinn, his wife and five children, possibly forcing them all into bankruptcy. He called it a vendetta by the bank against his family. The bank denies the claims.
Dublin-based IBRC would have faced greater difficulty pursuing Quinn for debts in Northern Ireland. The overturning of the ruling means Quinn cannot hold company directorships for up to 12 years.
Quinn said the tougher Irish rules meant he would be too old — 76 — to direct any new companies by the time the moratorium was lifted. “Anglo achieved their goal of ensuring that I will never create another job,” he said of Monday’s judgment, the AP reported.
Preliminary court hearings will be held in Dublin on February 2, where his wife and children are disputing the claim they owe the bank more than 2.4 billion euros, the BBC reports. Patricia Quinn and her children will claim huge loans made to them by the bank are invalid because they are “tainted with illegality”.
They allege that the bank used them as a conduit for a scheme to prop up the bank’s share price.
If the Quinns lose the case, they will be personally liable to pay back the loans.
Already, banks are seizing property and assets owned by the Quinns, both in Great Britain and Russia, Ukraine, and India, according to The New York Times. These include a hotel and golf course owned by Quinn’s son, and a wind energy company controlled by the family.