Vol 12 (2015) - Issue 5

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Irish Supreme Court Confirms that Dual Bankruptcies Can Exist under Irish Law

Introduction
The collapse of the Irish property market and the worldwide global recession in 2008 resulted in a dramatic increase in the number of bankruptcies in Ireland. Up until relatively recently, the bankruptcy laws in Ireland would have been considered quite draconian in comparison to the bankruptcy laws of our European counterparts, in particular the United Kingdom. Against this backdrop, a number of high profile Irish debtors opted to engage in ‘forum shopping’ in the hope of avoiding an adjudication order in Ireland.
The recent decision of the Irish Supreme Court in the case of In the matter of Sean Dunne (a bankrupt) has confirmed that it is possible for a debtor to be adjudicated a bankrupt under the laws of Ireland notwithstanding the fact that the debtor has already been adjudicated a bankrupt in another jurisdiction which is not subject to the European Insolvency Regulation. The written decision of Ms Justice Laffoy was delivered on 15 May 2015 and is the first such decision of the Irish courts on this issue and is therefore a welcomed clarification of the law.

Overview of the facts
On 12 February 2013, Ulster Bank Ireland Limited (the 'Petitioner') petitioned on foot a judgment debt of approximately EUR 164 million to have Sean Dunne (the 'Appellant') adjudicated a bankrupt. Approximately six weeks later, on 29 March 2013, the Appellant voluntarily filed for Chapter 7 Bankruptcy in the United States of America the effect of which was that a Chapter 7 trustee ('Chapter 7 Trustee') was appointed to the Appellant’s estate and an automatic worldwide stay took effect. On 4 June 2013, the US Bankruptcy Court granted an order modifying the automatic stay to allow the Petitioner to continue with the Irish bankruptcy proceedings. The Appellant appealed this order and applied for a stay pending the appeal. The stay application was ultimately denied on 18 July 2013, shortly after which the Appellant was served with the Irish bankruptcy proceedings.
The Appellant was adjudicated a bankrupt by the High Court on 29 July 2013. He subsequently applied to the High Court for an order overturning the original bankruptcy order but was ultimately unsuccessful in his application in this regard.
It was the decision of the High Court to refuse his application to set aside the original bankruptcy order which was the subject of the Supreme Court appeal.

Grounds of appeal
The appellant advanced three grounds of appeal, the principal ground being that the High Court did not have the requisite jurisdiction to make an adjudication order under the Bankruptcy Act 1988 (as amended) (the '1988 Act') where the Appellant had already been adjudicated a bankrupt in another jurisdiction, in this case the United States of America. For completeness, the Appellant’s other grounds of appeal (which were not advanced with any great purpose) were that: (i) the trial judge had erred in his application of the law in determining that the Appellant was Irish domiciled at the date of the presentation of the petition; and (ii) the Appellant had not been properly served with the Irish bankruptcy proceedings.
In circumstances where the Appellant had not appealed the other grounds on which the High Court had relied in adjudicating him a bankrupt, the Supreme Court was satisfied that the issue of whether or not the Appellant was in fact Irish domiciled was moot. In her written judgment, however, Ms Justice Laffoy noted that had it been necessary for the Supreme Court to consider this issue it would not be possible to conclude that the Appellant had discharged the onus of proving that he was not domiciled in Ireland on the date of the presentation of the petition.
On the issue of service, the Supreme Court was satisfied that the High Court was wholly justified in proceeding with the hearing of the petition on the basis that the service actually effected on the Appellant was sufficient and that the Appellant had not suffered any prejudice by reason of having had less than seven days’ notice of the petition hearing date.