Bankruptcy Lawyer Bryan W. Stone answers the question: “What is a small business bankruptcy ?”
A cross-continental bankruptcy case recently cast some light on the ways in which representatives of non-citizen debtors can—and cannot—track down those who owe the debtors money.
In short, the court held that Yahoo could not be forced to turn over the contents of an email account without the account user’s consent or more proof that the evidence contained in the account belonged to an Irish bank that is alleging fraud. However, the longer version is worth a read for the dramatic background alone.
Rags to riches to…
Seán Quinn, a self-made Irish business mogul, was ranked as the richest person in the Republic of Ireland in 2008. What began as a gravel quarry he set up on a £100 loan in 1973 had eventually expanded into Ireland’s hospitality industry, the insurance business, and property management.
But in 2010, Quinn’s business empire collapsed. By 2012, the Republic of Ireland had declared him bankrupt.
So what went wrong? Although the majority of this tale of bankruptcy takes place overseas, the tale will not ring as foreign to many living in the United States.
Taxpayer bank buyout
It started when, as the Quinn Group expanded, Quinn also invested in what was then called the Anglo Irish Bank. The bank had been a major player involved in Ireland’s massive economic expansion of the mid-1990s to 2000s when investors from EU member nations were drawn there by Ireland’s favorable tax rates. Quinn eventually built up a 25 percent stake in the bank.
In 2008, his investment went disastrously wrong. Anglo Irish Bank, facing collapse, had to be bailed out by taxpayers. By 2009 the bank had been nationalized and had its affairs taken over by the Irish Banking Resolution Corporation (IBRC).
Ever since taking over, the IBRC has been locked in a legal battle with Quinn and his five (5) adult children who work for the Quinn Group.
Courts in Ireland found that the Quinn Family engaged in a “sophisticated scheme” to evade repayment on approximately €2.8 billion in loans the IBRC advanced to companies the Quinn Group owned or controlled. Despite numerous court orders against the Quinn Family, the IBRC has been unable to recover any of the assets or enforce its security interests at stake.
It’s all in the emails
In 2014, the IBRC’s attorneys received several informant tips about email addresses that were being used in connection with the Quinn Family’s scheme. One of those emails was linked to a Yahoo! Inc. account maintained and supported by companies within the UK.
After a discovery request with the English High Court, the IBRC received judicial permission to conduct a confidential investigation. That investigation led to the need for another—the IBRC discovered other email accounts they believed were connected to the Quinn family’s attempts to conceal assets. One of those email accounts, allegedly belonging to someone by the name of “Abdullah Rasimov,” was maintained and supported by companies within the United States.
For the U.S.-based email account, IBRC obtained a discovery order from a U.S. bankruptcy court. However, Yahoo refused to turn over any of the emails or other content contained in the account, arguing that it was protected by the U.S. Stored Communication Act (SCA).
As a workaround, the bank obtained an order compelling “Rasimov” to turn over the information contained in his email account. Because the whereabouts of “Rasimov” are unknown, they had to serve him with the order via—you guessed it—his Yahoo email account. The email went through.
However, when the bank tried to send a follow-up order shortly thereafter, it was returned “undeliverable.” The account had since been shut down.
Most recently, the U.S. bankruptcy court ruled that the IBRC had not met the burden required under the SCA to force Yahoo to turn over the email account’s contents. The burden requires that the bank show that the account’s contents relate to IBRC’s financial affairs or property. The court also held that under the circumstances of this case, the SCA prohibits the disclosure of a private email account without the actual user’s consent.
If you are contemplating bankruptcy in the Charlotte area, please call the skilled lawyers at Arnold & Smith, PLLC find additional resources here. As professionals who are experienced at handling all kinds of bankruptcy matters, our attorneys will provide you with legally sound advice for your particular situation.
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