The High Court has adjourned an application by Yesreb Holding Limited to use money held in escrow to fund its defence of a bankruptcy estate’s claim over a Dublin 4 property. The court said in principle that the company could draw on the fund for reasonable legal expenses, but did not make a final order on the amount or the process for approving withdrawals.
The proceedings concern Walford, on Shrewsbury Road. The Official Assignee in Sean Dunne’s bankruptcy claims that Dunne beneficially owned the property when he was adjudicated bankrupt in Ireland in 2013, and that it should form part of his bankruptcy estate. Yesreb denies the claim. The judgment records the Official Assignee’s allegations that transactions involving the property were sham transactions intended to defeat creditors; those claims were not decided in this application.
The judgment says Dunne contracted to buy Walford in 2005 for €57.95 million, but legal title remained with the vendors. In March 2013, the vendors conveyed it to Yesreb under an arrangement involving Dunne, who was described as acting as trustee for his wife. The Official Assignee alleges the conveyance was void under bankruptcy and property law. Yesreb is registered in Cyprus and, according to the judgment, is ultimately beneficially owned by Dunne’s son.
Yesreb later sold Walford to Celtic Trustees Limited. The sale proceeds, less capital gains withholding tax, were placed in escrow. The Official Assignee obtained a Mareva injunction restraining dealings with the fund. Yesreb asked to release part of it to pay defence costs, saying it had no other assets or funds. The court accepted that Yesreb had shown it lacked other assets to meet its legal expenses.
The Official Assignee’s claim in this case is to Walford, not directly to the escrow money. But in separate proceedings, Celtic Trustees has argued that any equitable interest in the property was transferred to the sale proceeds. The Official Assignee disputes that argument. The judge said either the Official Assignee or Celtic Trustees could ultimately be prejudiced if the fund were reduced, depending on the outcome of the litigation. Celtic Trustees indicated it would consent to releases subject to invoices being considered by its solicitors.
Justice Costello concluded that the possible prejudice to the Official Assignee did not outweigh the prejudice to Yesreb if it could not fund its defence. She said the freezing order did not give the Official Assignee security over the money, and that Yesreb could access funds for reasonable defence expenses if it had no sufficient unaffected assets. The judge stressed that the funds must not be improperly dissipated through excessive costs.
The application was adjourned for further submissions from all parties on how the court should assess Yesreb’s reasonable legal expenses. The judgment did not determine ownership of Walford or entitlement to the escrow proceeds.