The Irish Independent reports that former Anglo Irish Bank chief Sean FitzPatrick will be forced to rely on his wife's €3.6m share of his property and pension assets after being declared bankrupt by the High Court.

Yesterday all of the ex-banker's assets and debts fell under the control of special court official Chris Lehane. He has the power to sell all of Mr FitzPatrick's assets, including his half-share of a €3.4m pension, to his creditors including Anglo Irish Bank.

But despite losing control of his assets and property, it was revealed that he and his wife Catriona jointly own six properties. These include their €1.5m home in Greystones, Co Wicklow; a house in Bray; and apartments in Marbella and Dublin. Only the Marbella apartment does not have a mortgage. Mrs FitzPatrick is also the beneficial owner of a half-share of Mr FitzPatrick's pension. The other half will now be taken over by the official assignee who cannot interfere with Mrs FitzPatrick's entitlements.

The first high-profile declaration of bankruptcy comes as developer Bernard McNamara, who has debts of €1.5bn, yesterday stepped up his fight to avoid a similar fate.

Mr McNamara is facing bankruptcy on foot of a €2.15m debt arising from a property deal. But his lawyers told the High Court yesterday that the petition filed by former business associates Gary Smith and Ivor Dougan is offset by a €101m debt Mr McNamara claims the pair owe him.

Legal experts have predicted a huge rise in bankruptcies against high-profile debtors, including former Anglo executives, who cannot discharge their debts. Yesterday, some 20 bankruptcy actions were listed before the High Court.

Mr FitzPatrick, who revealed in court papers that he has only €5,500 in hard cash available to him, will now be dependant on his wife for his future income.

The former Anglo chief, who has debts of almost €150m, including €110m to his former employers, was not in court yesterday for the six-minute hearing where his lawyer, Mark Sanfey, said he was "bowing to the inevitable".

The former banker and chartered accountant had fought a determined but ill-fated battle to avoid bankruptcy, devising a plan for his creditors that would include the sale of his half-share in his family home and pension.

But Anglo, his largest creditor, shot down the proposed scheme of arrangement, insisting yesterday that his scheme would never have worked.

Mr Sanfey told High Court Judge Mr Justice Brian McGovern that at a meeting held last Wednesday, creditors were told that the scheme would provide a "significantly better" outcome for them than if Mr FitzPatrick was to be declared a bankrupt.

Several creditors spoke in favour of the proposals, but Anglo, which holds some 85pc of his debts, denied that the scheme put to creditors by Mr FitzPatrick would result in a more favourable outcome.

Mr Justice McGovern intervened between the two sides and stated he did not wish the bankruptcy court to be used to ventilate issues that may arise between the parties.

"If anything needs to be said, it should be done in a different forum," said Mr Justice McGovern, who granted permission to the official assignee to engage a financial adviser and a solicitor to deal with Mr FitzPatrick's estate.

Court papers revealed a stunning array of investments amassed by Mr FitzPatrick at the height of the boom between 2005 and 2007.

His assets are estimated to be worth €50m, including investments of some €45.7m, and some €1.23m in accounts in various financial institutions.

The estimated level of Mr FitzPatrick's unsecured creditors is €70.2m while he is also appealing some €2m in various tax liabilities.

Mr Sanfey said that since Mr FitzPatrick got court protection on March 15, he had worked with his financial advisers to produce an independent forensic report under which it was proposed to have a private settlement scheme with his creditors rather than be declared bankrupt.

Support

Such a scheme requires 60pc support of creditors and last Wednesday a meeting was held with them at which a draft scheme and statement of affairs was presented, counsel said.

Ireland has one of the harshest and most outdated bankruptcy regimes in the Western world and debtors can be bankrupted for debts as low as €1,900.

All assets and property -- including the family home, all stocks and shares as well as any assets or property acquired after a person has been declared bankrupt -- are claimed by the official assignee for the benefit of creditors.

Individuals can only be discharged as a bankrupt once their debts and the costs of their bankruptcy are covered, or after 12 years have elapsed.

Taoiseach Brian Cowen refused to be drawn yesterday on Mr FitzPatrick's bankruptcy. "These are matters for the courts. Everyone is equal before the law and these issues arise and have to be dealt with by the courts."

The Irish Independent also reports that the gap between foreign- and Irish-owned industry widened further in May, with a strong rise in output from the "modern" -- mainly multinational -- sector.

In the three months March to May, production rose 3.2pc compared with the previous three months. May output was 9.5pc higher than the same month last year, according to the Central Statistics Office.

The increase was led by the pharmaceutical industry, with an increase of almost 26pc, but output in computers, electronic and optical products fell 28pc.

Such is the size of the pharmaceutical sector, at around €15bn, that production in the whole modern sector was up 13.9pc from a year earlier. But the "traditional" sector, dominated by Irish-owned firms, showed a 0.8pc drop.

However, traditional industry performed well in May, with an increase of almost 4pc over April, after seasonal factors are taken into account.

Preliminary figures for the three months to May showed output at just over 1pc higher than in the preceding period.

Detailed estimates showed production of food and drink up 3.2pc in the three months, while clothing had a 12pc increase, after seasonal adjustments. Production of paper and paper products dropped almost 11pc.

"Quite clearly, indigenous industries are still suffering from the sluggish UK economy and exchange rates," said Alan McQuaid, chief economist at Bloxham Stockbrokers, "but currency developments are now turning more favourable".

"We are still looking for sterling to appreciate to 80p to the euro -- or possibly lower -- by year-end, which would be a welcome development for Ireland," he said.

The Irish Times reports that the EU authorities are preparing to deal with “pockets of vulnerability” after stress tests on 91 European banks, economics commissioner Olli Rehn has said.

Mr Rehn’s remarks late last night came ahead of a meeting today of EU finance ministers, who will discuss fresh efforts to bridge a gap with MEPs over the parameters of a new system of pan-European financial regulation.

With results of the stress tests to be made public on Friday week amid claims they will not provide sufficient reassurance on the health of banks, Mr Rehn is known to be pushing for the publication of individual banks’ exposure to sovereign debt.

After a meeting of euro group finance ministers, Mr Rehn said the EU executive was ready to rapidly review any requests to provide state aid to banks.

“I won’t be prejudging the results, but in my view the European banking sector is overall resilient but, at the same time, when you publish the stress test we will have to prepare for any possible pockets of vulnerability and for that is essential that the national backstops will be in place. Which is the case, they are in place,” he said.

He was speaking as newly installed Slovak prime minister Iveta Radicova came under pressure to sign up to the €440 billion euro-zone loan guarantee scheme for distressed single currency members.

Ms Radicova has yet to make good on a pledge by her predecessor to take part in the European Financial Stability Facility (EFSF) and remains opposed to Slovak participation in a separate fund for Greece.

“We made it clear in today’s discussion that our expectation was that the Slovak government will sign the framework agreement and it will take on board all the commitments which have been taken by the previous Slovak government,” said Luxembourgish prime minister Jean-Claude Juncker, president of the euro group. Mr Juncker, who said Ms Radicova’s resistance to the Greek scheme was the “most relevant” question, will raise the issue with her this morning.

The euro group meeting was addressed by EFSF chief Klaus Regling, who told reporters the new fund could begin its work very quickly. He also said the German public debt office – the Finanzagentur – will issue debt for the EFSF and carry out risk management, asset liability management and treasury operations for the body.

Mr Juncker lauded efforts by the Greek government to restore order in its public finances, indicating a €9 billion loan expected in two months is likely to be approved. “I am confident the results achieved by Greece will allow for the timely disbursement of the second tranche of the loans in September.”

The euro gathering followed a meeting on economic governance chaired by European Council president Herman Van Rompuy. He called for a wider range of financial and non-financial sanctions against EU states who flout budget rules but offered little detail.

Minister of State for Finance Martin Mansergh represented the Government at the meetings.

The Irish Times also reports that former Anglo Irish Bank chairman Seán FitzPatrick had access to loans of up to €100 million from other financial institutions on top of borrowings of €110 million he had drawn from Anglo, his creditors were told.

Mr FitzPatrick was declared bankrupt by the High Court yesterday after Anglo, his largest creditor, blocked a settlement under which he would have repaid part of his debts over time from the orderly sale of his assets and investments.

His assets, including various properties and investments, will now pass to the control of the official assignee, a court officer.

Lawyers for the former Anglo chief executive, who owes the bank €110 million, said that he was “bowing to the inevitable” by asking the court to declare him a bankrupt.

It could take upwards of six or seven years for Mr FitzPatrick to be discharged as a bankrupt, his lawyer, Dublin solicitor William O’Grady, told creditors at a private meeting last week.

Mr FitzPatrick has total liabilities of €147.9 million but assets currently valued at €51 million, leaving a deficit of €96.7 million.

His debts include some €58 million arising as a contingent liabilities under personal guarantees he provided in respect of his investments, including €9.3 million provided for his adult children.

Under his proposed settlement deal, Mr FitzPatrick had offered to sell his half-share in his family home in Greystones, Co Wicklow, to his wife and distribute the proceeds towards his creditors.

He also offered half his pension worth €3.4 million, the other half of which went to his wife, and his car, a 2008 Volkswagen Passat, which he has valued at €15,000.

Mr FitzPatrick’s advisers told creditors last week in a bid to secure a settlement that he had access to up to €100 million in loans from institutions other than Anglo.

These loans were secured on bank shares, including five million shares in Anglo which were worth €50 million in June 2008.

He also held Anglo bonds and had substantial shareholdings in AIB, Bank of Ireland and other quoted financial institutions, which fell sharply in the crisis.

He also held a large property portfolio, the value of which also declined dramatically in the crash.

Mr FitzPatrick’s advisers have valued his Anglo shares at zero.

His assets include €1.6 million in various bank accounts at Anglo, Bank of Ireland and its subsidiary, ICS Building Society, and Ulster Bank.

He owns half-shares in properties in apartments in Smithfield and Killiney, Dublin; Greystones, Co Wicklow; and Marbella, Spain.

His investments include properties in the UK, France, Hungary, Poland, South Africa and the US.

He has share portfolios at Dublin stockbroking firms Davy, Bloxham, Goodbody and NCB.

Mr FitzPatrick is in dispute with the Revenue Commissioners over some €2.8 million in relation to capital gains and income taxes.

The Irish Examiner reports that Ireland is out of recession and back in business, Brian Cowen told American investors yesterday.

Speaking at the New York Stock Exchange at the beginning of a visit to the US, the Taoiseach said a new €500 million innovation fund would help create up to 120,000 jobs during the next decade.

The Government will invest half the money in the project and hopes to attract the rest from venture capital groups, especially US-based ones.

"Venture capital is an essential ingredient for supporting entrepreneurs and ensuring businesses can scale and create jobs. Lack of finance consistently emerges as a key impediment for innovative firms.

"Many successful companies that are now household names, like Google, Facebook and Staples, relied on venture financing to achieve the scale necessary to become multinational companies and provide large numbers of jobs... We must provide the right environment for such companies to develop in Ireland," he told US business leaders.

"In launching Innovation Fund – Ireland, we are presenting a positive message of confidence.

"The foundations for economic growth are not destroyed, but are firmly in place, ready to be built on. The recovery is underway.

"Not only have we come through the recession, recording the fastest rate of GDP growth in the EU, we will deliver on the step-change needed to secure sustainable economic growth through a significant increase in the level of company start-ups and job creation in innovative, export-focused sectors," Mr Cowen said.

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