Fall of ‘Mighty Quinn’ mirrors Irish collapse

He was once Ireland’s richest man, with a personal fortune estimated at $6bn and all the trappings of the very wealthy – a helicopter, a private jet and a string of international properties. But in a Belfast court this month Sean Quinn was declared bankrupt with debts of €416m ($563m) and just over €11,000 in his bank accounts.

Nicknamed the “Mighty Quinn” for his tenacity in business, he founded the Quinn Group with a £100 loan in 1973 and built it into a conglomerate that ranged from cement to insurance. But a disastrous multibillion-euro gamble on the share price of Anglo Irish Bank prompted Mr Quinn’s spectacular fall from grace.
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“My employment has been effectively terminated [without compensation],” said Mr Quinn in the debtor’s petition he filed to the High Court in Belfast, where he lists his assets as a 2004 Mercedes and a £35,000 ($55,000) plot of land he owns with his wife.

The rise and fall of the 63-year-old businessman mirrors Ireland’s Celtic Tiger boom and bust. It has also sparked one of the most expensive and bitter legal battles in Irish history.

Mr Quinn lost control of Quinn Insurance – one of the three main parts of the Quinn Group – in March 2010 when the Irish financial regulator placed the company into administration for failing to rectify a solvency shortfall. A year later Anglo enforced its security over €2bn in loans issued to the Quinn Group. A receiver was appointed, which led to Mr Quinn and other family members being stripped of their positions in the Quinn holding company.

Anglo, which was nationalised in 2009 at an estimated cost of €25bn-€30bn to Irish taxpayers, recently sold the Quinn insurance business to US firm Liberty Mutual and is restructuring the debt of the Quinn manufacturing business. Neither deal did much to reduce the overall Quinn debt to Anglo.
Anglo alleges ‘conspiracy’ over property portfolio

Anglo Irish Bank alleges that the Quinn family are involved in a “conspiracy” to move hundreds of millions of euros in property assets beyond the reach of the state-owned lender, writes Jamie Smyth.

The bank has filed lawsuits in Ireland, Sweden, Ukraine and Cyprus to try to prevent the transfer of flagship properties, which it claims are mortgaged to the bank. It is also seeking to lift legal injunctions obtained by the Quinn family to prevent the bank seizing control of the properties.

In an affidavit to a Cypriot court – where one of the main Quinn property firms is registered – Anglo alleges that the interests in Russian companies with assets worth about $188m were wrongly transferred for the benefit of Quinn family members for a nominal sum of €1,000 ($1,351).

The property assets held by the Russian companies include the 20 storey Kutuzoff tower in central Moscow, which is estimated to be worth $188m.

In Ukraine Anglo is seeking to overturn a court injunction preventing it from gaining control of the Ukrainia department store in central Kiev, which is worth about $80m. Anglo is also seeking to secure the rent roll from the Quinns’ Ukrainian properties, estimated to be worth about €30m a year.

The Quinn family oppose Anglo’s claims. They say the loans advanced by the bank were “illegal and unenforceable” and they are protecting the assets on the basis of strong legal advice.

The Quinn property portfolio includes several flagship properties including: the Q City office development in Hyderbad, India; the Casipy business centre in Moscow; and the Leonardo business centre in Kiev, Ukraine.

In 2007 Mr Quinn took a huge gamble on Anglo’s share price using contracts for difference, an anonymous form of investment that allows the holder to bet on price movements without buying the shares outright. Mr Quinn amassed a CFD-based holding in Anglo of close to 30 per cent, initially funding the bets with a €750m loan from the Quinn Group. But when the bank’s share price began falling sharply, the Quinn Group was advanced loans by Anglo to cover the CFD position.

It is not just Mr Quinn and taxpayers who stand to lose from the bet on Anglo. His decision in 2002 to transfer ownership of the Quinn Group to his five children has placed the family at the centre of one of several legal cases.

Anglo is pursuing the Quinn family for alleged debts of €2.88bn, which are related to loans advanced to the Quinn Group to fund the CFD transactions, property acquisitions and other deals. It is also challenging Mr Quinn’s decision to locate his bankruptcy in Northern Ireland, which has much more lenient insolvency regime than in the Republic of Ireland, where bankrupts must wait up to 12 years to be discharged.

Anglo alleges that Mr Quinn owes more than €2bn, not the €416m he claims. It claims his main centre of interest is in the Republic of Ireland.

On Monday in the Dublin High Court Anglo will seek a €2bn summary judgment order against Mr Quinn.

In a statement to the Financial Times the Quinn family said they were “saddened that Anglo at the expense of the Irish taxpayer continues to persecute” their father in relation to his bankruptcy.

The bank is engaged in a legal battle with the Quinn family for control of the third element of the Quinn Group – a €500m property empire spanning the UK, Ireland, Czech Republic, Ukraine, Russia, Turkey and India.

This portfolio is the jewel in the crown of the Quinn group and the only hope of repaying some of the alleged €2.8bn debt to Anglo.

The Quinn family itself is suing Anglo. They claim the bank advanced €2.34bn in loans to fund the CFD margin calls to support its share price. They allege that Anglo’s former chief executive David Drumm and chairman Sean Fitzpatrick advanced the loans to the Quinn Group in the full knowledge the money was being used to meet the CFD margin calls. They say the loans are “tainted with illegality” because they had an objective of market manipulation and therefore are not enforceable.

Anglo, which has recently been rebranded Irish Bank Resolution Corporation, denies these claims.