By: Michael O’FarrellÂ
Investigations Editor
A BANKRUPTCY solicitor centrally involved in mortgage help group New Beginning is set to sue the group for alleged unpaid fees.
The controversial organisation – which is currently being investigated for a data breach revealed by the Irish Mail on Sunday – is facing significant internal turmoil after replacing its bankruptcy solicitor with an insolvency adviser who is facing serious negligence claims.
The just-departed solicitor, Seán Foley of Century Law, is preparing to sue New Beginning over what he alleges are unpaid fees.
Mr Foley was charged with possession of child pornography in 2004 but was acquited.
Alleging that New Beginning had failed to pay his fees as they came due, Mr Foley said: ‘For New Beginning to be holding itself out as a firm that wants to handle other people’s insolvencies is a bit of a contradiction. There’s a bit of a comedy there.’
Meanwhile, Neo Financial Solutions, the firm that has replaced Mr Foley as New Beginning’s head of bankruptcy services, is itself facing a major lawsuit as former clients accuse it of misleading them by advising that bankruptcy was their only option.
In November, Catherine and Martin Byrne from Cavan became the first and only people to have their bankruptcy annulled when they alleged they had been ill-advised by Neo Financial and its owner, Paul Carroll.
Last night, the Byrnes’ lawyers, Holohan Law, confirmed they were poised to lodge proceedings for negligence against Mr Carroll and a personal insolvency practitioner.
‘We will be issuing legal proceedings in the week commencing next Monday against Mr Carroll and the PIP involved,’ a spokesman said.
Central to the case will be allegations, already aired during the Byrnes’ bankruptcy annulment hearing in November, that they had never met a PIP prior to their bankruptcy application, as legally required.
The court heard that a letter from a PIP whom they had never met was included as part of their application.
Any hearing into these matters will focus considerable attention on the practices of Mr Carroll and Neo Financial Solutions, just as he begins his association with New Beginning.
Mr Carroll announced a ‘merger’ between his firm and New Beginning on his website last weekend. He said: ‘The new merged enterprise trading under the New Beginning brand will bring together the most experienced teams in Ireland currently dealing with bankruptcy, personal insolvency and debt management.’ The announcement came weeks after a new company, New Beginning Processing Services Ltd, was incorporated on January 23 with Mr Carroll and New Beginning founder Ross Maguire as directors.
The new entity is the latest in a number of new commercial companies associated with New Beginning. Its Articles of Association state: ‘The objects of the company are to carry on the business of bankruptcy processing services – taking over all bankruptcy services on a commercial basis, consultancy and anything ancillary to the above.’ But it appears Mr Foley, whose firm Century Law had previously negotiated an exclusive deal to handle all New Beginning bankruptcies, was given no warning of the changes.
‘No, absolutely not. It was a bolt from the blue. He [Mr Carroll] is now the master of ceremonies when it comes to bankruptcy. He seems to be in charge and I’ve been put in my place and that’s the end of it,’ he told the MoS.
‘Maybe their idea was to get rid of me… and significantly reduce costs. I’m all for reducing costs but not when it comes to cutting in on my action. I helped them in terms of kicking things off and giving them the use of my office. It’s unbelievable.
To this day, I haven’t got a phone call back from anyone in there.’ Mr Foley acknowledged internal New Beginning correspondence – previously published by the MoS – in which the group’s financial controller, Johnny Moran, advised a dissociation from Mr Foley.
Mr Moran’s advice said New Beginning would be more profitable if it brought bankruptcy in-house and would also protect itself from any potential ‘reputational damage’ arising from Mr Foley’s past.
‘That was truly disgusting. I was very annoyed about that. You’d imagine they’d have said, “Seán, can we do something about your past or can we do something about your fees? We’re running onto stony ground here and we’re having problems.” But I didn’t realise at the time that there were moves afoot to get rid of me all together.’ Mr Foley said he had drafted legal papers because New Beginning had not paid him his fees.
‘I’m owed monies for work that was done in bankruptcies and I have asked on numerous occasions for my money and they haven’t come back to me,’ he alleged.
‘I have drafted up District Court proceedings and I have been holding out on lodging those on the basis that I’ve been told they will get back to me. But no-one seems to be getting back to me.’ Mr Foley said New Beginning had asked for a meeting ‘to come to some type of arrangement’ but said he was unhappy with this suggestion.
‘The only arrangement I would like to see is a postdated cheque rather than having cheques stopped… I’ve got people to pay myself. Century Law doesn’t survive on thin air,’ he said. ‘Just suddenly everything came to a full stop. I’m in business myself and people get into problems with paying suppliers but generally what you do is sit down with your creditor and say, “Can we resolve this matter? I’ll give you an undertaking, I’ll give you a postdated cheque or cut you a deal as regards more future bankruptcies”, but nothing like that has come forth.’ New Beginning is the focus of a continuing investigation by the Office of the Data Protection Commissioner, launched last November after the MoS revealed that the personal financial details of clients had been sold to a Malta-based fund.
The mortgage group admitted the data breach and apologised though it did not report the issue to the ODPC until after the MoS sought to publish the matter. The details sold included the salaries, mortgage arrears and home values of up to 1,500 families who had gone to New Beginning for help. New Beginning sold the data to a €2bn fund called Arizun, which wants to buy 15,000 distressed mortgages from Irish banks and rent the homes back to occupants. Arizun is continuing to lobby Government and the banks to secure this deal.
In return for the information and lobbying services, New Beginning was paid €20,000 and put on a €5,000 monthly retainer for three months.
According to letters of assurance provided by Arizun, New Beginning also stands to gain as much as €5m if all targets are met.
But internal correspondence revealed New Beginning was privately sceptical. Both New Beginning and Mr Carroll declined to comment.
