Former Irish billionaire declares personal bankruptcy

November 15, 2011 by · Leave a Comment
Filed under: Credit News 

What a misstep on the part of Sean Quinn.  He should of never pledged his entire equity of the Quinn Group to the bank to acquire its shares.  When you took the money from the bank and started buying, you basically locked yourself in at the prices you purchase shares at.  If you don’t acquire the majority stake in the bank, you loaned capital is now at the mercy of the managers of the bank and their board.  In this case, the fix was already baked in so it would not of mattered if he got control of the now failed firm.  It is plain to see what happened next, the bank was leveraged up with toxic real estate assets and as those declines, the shares fell and the bank went under.  Now Mr. Quinn owes a huge note to a failed bank for billions and he owns shares in a bank that is now insolvent.

This is what happens when we use so much leverage in the system.  Companies and people can just explode and leave huge liabilities that hurt the employees and shareholders alike.

Forbes (Edwin Durgy) – Once Ireland’s richest man with a personal fortune of $6 billion, Sean Quinn applied for voluntary bankruptcy in Belfast this morning. Quinn owed an alleged $3.85 billion to Anglo Irish Bank’s successor institution, the Irish Bank Resolution Corporation, which he simply couldn’t repay.

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