Court rules against David Drumm

BOSTON — The case against Irish former bank chief and onetime Chatham resident David Drumm is still on, a judge ruled in U.S. Bankruptcy Court on Thursday, despite defense claims that the complaint should be dismissed because key documents were filed after deadline.

Drumm’s lawyers argued that the document should have been filed by 4:30 p.m. on Aug. 31, when the court clerk’s office closed for the day. An attorney for bankruptcy trustee Kathleen Dwyer contended that his client had until midnight on that day and that the 5:21 p.m. electronic filing complied with this deadline.

Chief Judge Frank Bailey ruled that Dwyer’s complaint objecting to the discharge of Drumm’s debts was filed in a timely manner.

“I can’t ignore that we’re in the electronic age,” Bailey said. “In my mind, the trustee could reasonably have relied on her belief that she had the day to file.”

Drumm, the former CEO of Anglo Irish Bank in Dublin, resigned from the scandal-plagued bank in late 2008, a month before it was nationalized. In 2009, he and his family moved from Ireland to their vacation home in Chatham, where they lived for several months before relocating to Wellesley.

The family has since left the Wellesley home, which Dwyer is seeking to sell as an asset of Drumm’s estate.

Despite ongoing calls from investigators and the Irish public, Drumm has yet to return to Ireland to answer questions about his conduct as head of Anglo Irish.

Drumm filed for bankruptcy protection in October 2010. In August 2011, both Dwyer and Anglo Irish, Drumm’s largest creditor, objected to the discharge of his debts, citing what they called “fraudulent” efforts to protect assets by transferring them to his wife.

Thursday, Drumm’s attorney Francis Morrissey tried to have Dwyer’s complaint dismissed.

His main argument was that Dwyer had missed the deadline to file her complaint, despite several extensions. If Dwyer were allowed to proceed, the case would be prejudiced against Drumm, Morrissey said, because he would then incur the expense and risk of defending himself against both the trustee and Anglo Irish at the same time.

Dwyer’s attorney, Charles Bennett, disagreed. If the complaint were dismissed, he said, it would be Drumm’s creditors who were handicapped, as most would not have anyone protecting their specific interests in the proceeding.

“There is substantial prejudice to creditors other than Anglo Irish,” he said.

A short time later, Anglo Irish lawyer Kenneth Leonetti asked to address the court, prompting a reaction from Morrissey.

“Here’s an example of prejudice,” he said, gesturing at Leonetti. “Two lawyers against one. Exhibit A.”

Leonetti argued that, regardless of whether Dwyer’s filing was deemed late, it was always clear that Drumm would have to defend himself further in this case.

“There was no surprise that these “» complaints were coming against Mr. Drumm,” he said. “These deadlines were extended for the sole reason of Mr. Drumm’s slow dribbling out of documents.”

After ruling on the deadline issue, Bailey said that he is inclined to approve an agreement, already reached among the opposing parties, to consolidate the complaints made by Dwyer and Anglo Irish. Bailey noted that the two objectors should make every effort to share information and not duplicate each other’s requests.

“The work needs to get done,” he said. “It doesn’t need to get done twice.”

The cases now move into the discovery phase, in which evidence is shared by the opposing sides. The parties have agreed to a 4½-month period for this stage of the proceedings.

This story was published in the Cape Cod Times on January 13, 2012.

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