Liquidator launches legal action over collapse of German real estate program
The liquidator of an Irish company that raised money for a German property company that collapsed in 2020 and owed investors here €107m has taken legal action against several companies and individuals linked to the ill-fated scheme.
The case concerns the collapse of German Property Group (GPG), formerly known as Dolphin Trust, which raised investments in Irish debt through local intermediaries. The €107 million in investor loans were believed to be secured against a plot of land in Berlin, which was valued in a report commissioned by an Irish intermediary, Wealth Options Trustees Limited (WOTL), at around €85 million. . WOTL helped organize the Irish fundraiser for Dolphin.
Myles Kirby, the liquidator of MUT 103, one of Wealth Option’s vehicles to raise the loans, suggested that Irish investors were in fact only using around 10% of the land, not all of the plot. MUT, which owes 41 million euros to its investors, is now in liquidation following the collapse of GPG, and Mr Kirby is turning to the courts to obtain money for creditors.
MUT 103 filed a complaint this week against local Irish broker WOTL and another related company, Wealth Options Capital, as well as Wealth Options directors Éanna McCloskey and Brian Flynn. He is also suing the estate of a deceased director of Wealth Options.
MUT is also suing RE Administration, a liquidation company linked to Dolphin, and its administrators, Cormac Smith and Marc Reilly, as well as Lisa Marie Keane, who worked there.
WOTL said this week it could not comment directly on a live court case, but it said the Wealth Options companies and their administrators “will vigorously defend all allegations that have been made against them.” WOTL had previously told the Irish Times that it “rely at all times on professional advisers in Germany”.
Anthony Fitzpatrick, the liquidator of RE Administration, confirmed on Friday that he had received legal documents. He said Mr Kirby ‘seems to have concluded that the RE administration has a case to answer in this regard when that is not the case’.
Mr Fitzpatrick also said that MUT investors had “advanced funds, in the absence of any state guarantee or regulation, in the hope of recouping unrealistic investment returns of around 20% and more. per year”.
In a note to creditors this week, Mr Kirby said MUT, in his case, would seek damages for alleged breach of contract, negligence, unjust enrichment and breach of duty. He said he would also seek additional damages for “negligent misrepresentation”. He said filing the case was the “first step” in a process that could take “several months or more” before he is ready to stand trial.
Dolphin MUT 116, another Irish vehicle set up to raise funds for the program by WOTL, is also in liquidation, with KPMG appointed to oversee it. This entity is not a party to the MUT 103 lawsuit.
In total, GPG collapsed after raising 1.5 billion euros from investors located in particular in Ireland, Great Britain and Asia. It was created by businessman Charles Smethurst in 2008.
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