Life after bankruptcy: Limerick developer returns to financial role in city

Anne Sheridan

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Anne Sheridan

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anne.sheridan@limerickleader.ie

Life after bankruptcy: Limerick developer returns to financial role in city

ONE of Limerick's most high profile developers, who received a record judgment of €86.5m against him in the High Court, has been discharged from bankruptcy.

The judgment against Michael Daly, who was behind some of the most pivotal developments in Limerick including the €75m Riverpoint building and the €100m Savoy Hotel development, was the largest ever entered against an individual at the Commercial Court when it was handed down in 2010.

Mr Daly, 59, of the North Circular Road, consented to a judgment of €86,543,769 entered against him over unpaid property loans of over €165 million made to a number of companies and partnerships associated with his Fordmount group by Anglo Irish Bank.

Mr Daly has confirmed to the Limerick Leader that following the judgment he paid €1,000 a month for approximately 18 months until the settlement process failed, before entering bankruptcy. 

The chartered accountant first offered to repay that sum from his monthly salary of €3,000 in 2013, when he was queried by NAMA in court over whether he had provided full details related to his financial affairs.

At that time, he said he considered NAMA’s attitude “wholly unreasonable” as he had disclosed all documents available to him and fully co-operated.

Speaking for the first time since being discharged following a one-year period of bankruptcy, he told the Limerick Leader: “I don’t have any assets but I don’t see ourselves as being impoverished.”

He said representatives of Anglo Irish claimed that they would make him bankrupt and take his family home.

“I’m glad they only achieved one. I put structures in place from 2004 on that stood the test of time,” he said, referring to the period when he set up the Fordmount group.

Since the judgment, Mr Daly has been attempting to rebuild his career, after initially declaring that he was “finished financially” by the order against him.

He is now working for a financial company in Limerick city “helping people out of their own financial difficulties because of technical expertise in this area”.

Once worth an estimated €40 million, according to The Sunday Times Rich List, he said this was “just monopoly money”.

He confirmed that during the boom he bought three cars in one day - two BMWs and a Mini-Cooper - for him and his family, while he also enjoyed a trip on the Orient Express at a “huge cost” to Anglo Irish, along with some 40 other “favourable” clients on a networking trip.

While Mr Daly has been forced to surrender a number of assets under his own name under the bankruptcy process, the family home on the North Circular Road remains within the extended family.

The property passed through the Property Price Register, the national database of all house sales, in 2016 for a sum of €257,500, however it has not been sold on the open market.

Documents obtained from the Land Registry by the Limerick Leader show that its ownership is now held by a sister-in-law of Mr Daly, who is listed as the full owner as of November 2016, with one of Mr Daly’s three daughters holding a charge worth €250,000 over the property on the same date.

He told the court in 2013, under questioning from NAMA about his personal finances, that he had transferred his share in the family home in 2009 to his wife Dympna “for natural love and affection” - before judgment was entered against him.

Mr Daly said that transfer was planned from 2004 - when he set up Fordmount after leaving his career in accountancy - while at one time the family owned five homes in Kilkee. 

He later confirmed to this newspaper that his wife’s share was transferred to her sister, who also resides on the North Circular Road.

The National Asset Loan Management Agency (NALM), which is represented by Arthur Cox solicitors, has initiated proceedings in the High Court in Dublin against Mr Daly and his wife, with affidavits lodged by the firm this April. 

It is the first time his wife has been listed as a co-defendant in any of the actions against her husband, and they are being represented by separate law firms in Limerick.

Mrs Daly, 58, was previously a director and shareholder of one of her husband’s companies, German Capital Investments Ltd, formerly known as Daly Capital Holdings Ltd.

Company accounts show that he transferred some of his shares in this company to his wife in March 2009, before his resignation from Fordmount and a host of other companies that June.

Mrs Daly was also previously a director of Daly Capital Developments Ltd, Daly Property Investments Ltd, Executive Investment Holdings Ltd, Gemside Ltd, Peachridge Ltd and Ravenridge Ltd.

Mr Daly this week declined to answer further questions regarding his financial affairs.

The former managing director of the Fordmount Property Group and a number of subsidiaries and partnerships claimed during the high-profile court case in 2010 that he was regarded as a “favoured developer” by Anglo.

In addition, he said at that time that he had “easy access” to senior figures in the bank, including former chairman Sean Fitzpatrick and former chief executive David Drumm.

He claimed that he was actively encouraged by Anglo in 2006 and 2007 to undertake massive property developments with the assurance hundreds of millions would be made available.

He claimed that he relied on oral assurances from Anglo executives that personal guarantees provided by him over loans were secondary to security taken by the bank and would never be relied upon. 

Anglo described as “incredible” his claims relating to the bank’s approach to the guarantees.

“I don’t have €86 million and won’t be able to meet it so the implications for me are catastrophic,” he told the court in 2010.

His statement of affairs, provided to the Examiner’s Office of the High Court, in declaring his assets as he was adjudicated bankrupt last year, is no longer publicly available as he was discharged from bankruptcy in recent months.

William O’Riordan, of Price Waterhouse Coopers (PwC), who was appointed receiver and manager to a number of the Fordmount companies, ceased work on realising the value of the assets this February, after being appointed in December 2009.

A receiver’s abstract for one of the Fordmount companies shows that €8,169,279.79 has been realised from its assets, after costs, predominantly from assets held in Castletroy.

PwC stepped down from the long-running appointment following the sale of some of the companies loans from NAMA to US investment giant Cerberus.

Mazars has been appointed as receiver to another company, Fordmount Developments Ltd, this January by the NALM DAC. 

It is understood that further assets in Castletroy have yet to be realised.

While he stepped down from the company six months before it entered receivership, Mr Daly told the Leader that to the best of his knowledge he believed the majority of its suppliers had been paid.

He resigned from 11 companies on June 29, 2009, and was replaced at the helm of Fordmount by solicitor Adrian Frawley, of Dermot G. O’Donovan and Partners law firm.

Dermot O’Donovan, Michael Sherry and Mr Frawley, all partners in DGOD, consented at the Commercial Court to judgment orders for €21.7 million against each of them, arising out of their involvement in three limited companies and two partnerships.

A fourth partner, who no longer works with that firm, Thomas Dalton, previously consented to summary judgment against him for €21.4 million.

Mr Daly is one of 51 Limerick people who have been adjudicated bankrupt in the past three years, according to statistics from the Personal Insolvency of Ireland.

The figure for Limerick represents a rate of 3.5 per 10,000 adults.

The number of bankruptcy adjudications in the State reached a peak of 526 in 2016, after the new one-year bankruptcy term was introduced on January 29 of that year.

To date this year, there have been 243 bankruptcy adjudications in the State, with a total bankruptcy debt of €178 million in the second quarter of this year.

The 105 bankruptcy adjudications in the second quarter represents a decrease of 23.9% on the first quarter, and a drop of 39.3% in comparison with the second quarter of 2016.

Since 2014, there have been 385 bankruptcy adjudications in Dublin, 207 in Cork and 126 in Kildare, which recorded the highest bankruptcy rate at 7.8 per 10,000 adults.

Bankruptcy laws saw the beginning of a radical overhaul in 2013 when the period of bankruptcy was cut from 12 years to three.

Last year it was further reduced to one year, to mirror the same period of bankruptcy in Northern Ireland and in Britain, reducing the move towards “bankruptcy tourism”, which saw some citizens of the State move to another jurisdiction for 12 months to take advantage of their shorter terms.

During the bankruptcy process, once a petition is granted, individuals are served with a bankruptcy order and a warrant of seizure which allows the Official Assignee to assume ownership of their property and sell it in order to raise money to pay creditors.

Individuals are allowed to keep a bank account and sufficient income for “reasonable living expenses”. Surplus income must go towards repaying debts.

Under the new regime, penalties for those who try to hide their assets during the process have been increased.

In cases of where the courts find serious non co-operation, a bankruptcy period could be extended up to 15 years.

“To be declared bankrupt is one of the more unfortunate things that can happen over the course of a lifetime,” said Mr Justice Michael Peart, in a ruling against Thomas Feely, the Priory Hall developer in Dublin earlier this year.

“Not only is it perceived to be a blot on one’s escutcheon, but it has also certain practical implications. For example, the bankrupt cannot access credit, and neither may he be a director of a limited liability company.

"On the other hand, bankruptcy can provide an opportunity to begin again, in the sense that the debts owed to existing creditors disappear, after the Official Assignee, in whom the bankrupt’s estate will have vested, has realised the assets of the estate, and used the proceeds to settle the debts owing to creditors on a pro rata basis, and usually for much less than full value.”

- See the weekend editions of the Limerick Leader for the full report over two pages, including Mr Daly's legacy to Limerick, and the effect Fordmount's collapse had on creditors