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Sean Quinn, Once Ireland's Richest Man, Declares Bankruptcy With Debts Exceeding $2.7 Billion

Sean Quinn Bankruptcy

SHAWN POGATCHNIK   01/16/12 11:55 AM ET  AP

DUBLIN — A famed entrepreneur who was once rated Ireland's richest person was declared bankrupt Monday as a bank pursues him for debts exceeding euro2.1 billion ($2.7 billion).

Lawyers for tycoon Sean Quinn withdrew his opposition to a Republic of Ireland bankruptcy order sought by the former Anglo Irish Bank, the reckless lender at the center of Ireland's calamitous property crash.

The bankruptcy judgment will force a thorough court investigation of Quinn's finances, which the bank hopes will reveal capital and assets that it can reclaim from Quinn, his wife and five children.

Quinn, 64, didn't attend Monday's court hearing. He issued a statement accusing the bank of pursuing "a personal vendetta" and declaring that the "judgment in no way improves Anglo's prospects of recovering money for the taxpayer."

Quinn had a reported 2007 net worth of euro4.7 billion ($6 billion) but sank much of his fortune into Anglo months before the bank – the most aggressive lender to Ireland's construction barons – suffered crippling losses as the country's decade-long property bubble burst.

The Quinn family secretly built up to a 28 percent stake in Anglo shares using an ill-regulated financial instrument that hid the scale of their investment from other stockholders. As Anglo's share price plunged, Quinn says the bank encouraged his family to borrow hundreds of millions specifically to buy more Anglo stock, a charge the bank denies.

Ireland nationalized Anglo in 2009 to prevent its collapse, wiping out a Quinn family investment estimated at euro2.8 billion. The government last year renamed Anglo as the Irish Bank Resolution Corp., or IBRC. Its bailout is expected to cost taxpayers euro29 billion, a bill so great it overwhelmed Ireland's finances and forced the government last year to negotiate a humiliating loan pact with the European Union and International Monetary Fund.

Dublin Commercial Court Justice Elizabeth Dunne told Quinn's lawyer Gavin Simons that Quinn would have to appear in person in coming days to provide documents showing how much he's worth today.

Last week Quinn lost a Belfast legal battle to retain bankruptcy protection in the neighboring British territory of Northern Ireland. The judge there ruled that Quinn had misled a previous Belfast court that his main base of business was in Northern Ireland, rather than the Republic of Ireland.

"I never done a day's work from southern Ireland in my life," Quinn, who has lived for decades in the Republic of Ireland, insisted to reporters outside the Belfast court last week.

Dublin-based IBRC would have faced greater difficulty pursuing Quinn for debts in Northern Ireland. Quinn also could have returned to business within a year under U.K. bankruptcy law, whereas the Irish prevent bankrupts from holding company directorships for up to 12 years.

Quinn said the tougher Irish rules meant he would be too old – 76 in the year 2024 – to direct any new companies then.

"Anglo achieved their goal of ensuring that I will never create another job," he said of Monday's judgment.

Quinn boasts one of Ireland's most celebrated rags-to-riches stories. He grew up on a border farm in Northern Ireland's County Fermanagh, left school barely literate at 14 and started his first construction-gravel business with a 100-pound ($150) bank loan.

Within three decades Quinn had transformed his quarry into a nationwide cement company. He built and bought luxury hotels, pubs, apartment complexes and commercial properties throughout Ireland, Britain, Eastern Europe and Asia; founded Ireland's third-largest insurance company; and took interests in glassworks, packaging and radiators.

In April 2011, IBRC seized ownership of his Irish-based Quinn Group, forced him and relatives off the board, and sold a majority stake in his insurance company to U.S. insurance company Liberty Mutual. In November, shortly after Quinn had secured a surprise bankruptcy-protection order in Belfast, the bank won Dublin court judgments totaling euro2.16 billion ($2.7 billion) against Quinn.

A November affidavit from Quinn recorded he had less than euro11,000 ($15,000) in cash in three bank accounts.

But the Quinns and IBRC are locked in several legal battles stretching from the British Virgin Islands to Cyprus over control of a commercial property empire spanning Britain, Russia, Ukraine, Turkey and India valued at more than euro700 million.

The bank accuses Quinn of fraudulently shifting ownership of his foreign properties, including office blocks and shopping malls, to relatives and shell companies that remain under the Quinns' surreptitious control. The Quinns deny these charges.

His five children have filed a Dublin lawsuit against IBRC seeking to have the bulk of the family's Anglo borrowing voided on the grounds that the bank should never have lent them the money in the first place. They also are seeking to have IBRC return businesses to their ownership that were seized in April 2011.

Their lawsuit argues that Anglo misled them about the company's imminent danger of collapse and spurred them to commit market fraud by manipulating Anglo's share price. IBRC insists Anglo's loans to the Quinns were for much wider business reasons.

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Online:

Irish Bank Resolution Corp., http://www.ibrc.ie/

Quinn's empire, http://www.quinn-group.com/

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Filed by Maxwell Strachan  |