A judge has been urged to consider a “very significant” change of circumstances when deciding whether to set aside a summons seeking the bankruptcy of hotelier Paddy McKillen jnr on foot of an alleged €2.1 million debt.
Judge Liam Kennedy last month heard McKillen jnr’s application for dismissal of the bankruptcy summons and reserved his decision on the matter.
Since then, lawyers for the businessman wrote to the court asking the judge to take into consideration a “material” change related to McKillen jnr’s separate case challenging the legality of the same December 2022 loan, which was advanced to his company Cool Dust.
But the lender and bankruptcy petitioner, Herbert Street Finance company (HSF), criticised the “unilateral correspondence” to the court. In a responding letter, Amoss solicitors, for HSF, said their client rejected in the “strongest terms” the “contents and proprietary” of McKillen jnr’s legal correspondence.
Outlining his client’s position to the court on Monday, Gary McCarthy, senior counsel for McKillen jnr, said HSF chose to enter his client’s case into the fast-track commercial division of the High Court and to enter a counterclaim seeking judgment regarding the same debt. This was done after the hearing of McKillen jnr’s application to set aside the bankruptcy summons.
The Commercial Court is now being asked to determine if the sum at the centre of the bankruptcy petition is due, said McCarthy, appearing with barrister Keith Farry. The bankruptcy judge can take into consideration this “very significant” change of circumstances when ruling on his client’s application, he added.
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HSF’s senior barrister, Bernard Dunleavy, said his side decided to move McKillen jnr’s case on “expeditiously”.
Counsel said McKillen jnr “made no effort” to enter his case into the Commercial Court, which works to hear proceedings faster than they would be heard in the mainstream High Court. McKillen jnr remains “unenthusiastic” about progressing his case, Dunleavy added.
The judge said he hopes to rule within the next two weeks on McKillen jnr’s application seeking to set aside HSF’s bankruptcy summons.
He said matters will be left in the hands of the Commercial Court if he rules in McKillen jnr’s favour. If he finds against the businessman and allows the petition to proceed, he said, it would “make no sense” for the parties to run the issues “on two fronts” before the bankruptcy and commercial courts.
The bankruptcy proceedings claim the €2.1 million debt arose on foot of McKillen jnr agreeing to pay on demand Cool Dust’s obligations to HSF up to €3 million.
During the hearing of McKillen jnr’s application last month, his lawyers argued a court must set aside a bankruptcy summons if the debtor raises a real and substantial issue to be tried in plenary proceedings.
McKillen jnr, of Torquay Road, Foxrock, Dublin, raised several issues, including that the alleged debt was overstated and the loan was illegal because it was allegedly not a commercial loan made by a registered credit institution but one extended to McKillen jnr personally. McKillen jnr denies he was indebted to the petitioner in any sum exceeding €20,000.
HSF claims €2.3 million was received in part payment of Cool Dust’s obligations, but about €2.14 million, plus daily interest, remains due. HSF’s lawyers contended McKillen jnr advanced a “contradictory” and “dishonest” narrative in his bid to set aside the bankruptcy summons. They contended it was clear the hotelier relied on his friendship with David Agar, of HSF, to get funds when he was “in desperate straits” in late 2022.
There was no evidence HSF knew in advance that the funds would be used to pay McKillen jnr’s other liabilities rather than to stabilise the Pinnacle apartment development in south Dublin, said HSF’s lawyers.
