Fraud case developer in challenge to appointment of bankruptcy trustee
July 07 2021 02:30 AM
A former millionaire property developer facing fraud charges is seeking to challenge the appointment of a forensic accountant as his bankruptcy trustee.
Philip Marley (49) alleges the appointment, made at the behest of a creditor, was “rogue” and “invalid”.
He made the claims in the High Court before Mr Justice Richard Humphreys, the judge who approved the appointment of accountant Mícheál Leydon last March.
Mr Marley, a businessman, became a multi-millionaire at the age of 33 when he floated his student accommodation business, Ely Property Group, on the AIM stock exchange in London in 2005.
He also had a relationship with reality TV star Dana Wilkey of The Real Housewives of Beverly Hills.
However, the Dubliner’s business empire collapsed, with Ely being liquidated in 2013. He was adjudicated bankrupt in 2019 with debts of €6.6m after a failed attempt to get a personal insolvency arrangement.
The petition was moved by UK private equity firm Maven Capital Partners LLP, which Mr Marley owes just over €1m.
Earlier this year, he was charged with stealing and laundering €260,000 as part of a property registration fraud. He denies the charges.
Although now discharged from bankruptcy, creditors are still pursuing Mr Marley’s pre-bankruptcy assets.
Normally, bankruptcy estates are administered by the Official Assignee, an independent officer based in the Insolvency Service.
However, following a proposal from Maven, creditors voted to install Mr Leydon as trustee in bankruptcy, instead of the Official Assignee, under a little-used section of the Bankruptcy Act.
While the reasons for this move were not outlined in court, such appointments tend to be made in more difficult bankruptcies where a greater degree of specialisation is needed to trace assets.
Three-fifths of creditors in number and value must vote in favour before a trustee in bankruptcy can be installed.
Mr Marley alleges the creditors’ meeting was flawed as the vote of Permanent TSB, a creditor opposed to the appointment, was not counted.
Last March, Mr Justice Humphreys put a six-week stay on the appointment of Mr Leydon to allow Permanent TSB time to object. However, it did not intervene and Mr Leydon subsequently started his work.
Mr Marley went to the Court of Appeal, which directed the matter back to Mr Justice Humphreys. In the High Court on Monday, Mr Marley claimed Permanent TSB did not intervene because it “was denied the knowledge its vote wasn’t counted”.
“I think it will become very clear to you what happened here,” he told the judge. “It was a hijacking of a bankruptcy by an aggrieved creditor who bankrupted me in the first place.”
Niall Ó hUiginn, counsel for Maven, described the language used by Mr Marley as “incendiary”. “My client refutes all of that,” he said.
Mr Ó hUiginn told the judge Mr Marley did not have any standing to challenge Mr Leydon’s appointment.
“It is the prerogative of the creditors to appoint a trustee in bankruptcy, just as it is the prerogative of the creditors in a liquidation to appoint their own liquidator,” he said.
However, Mr Marley argued he did have standing.
Mr Justice Humphreys adjourned the matter to later this month, when he will consider whether, and to what extent, Mr Leydon can continue his work pending the outcome of Mr Marley’s challenge.