THE GRANTING of court protection from creditors to several companies in Liam Carroll’s Zoe group prevents ACCBank or any other creditor from recovering loans or taking legal proceedings against the companies without the court’s consent.
The protection issued to the Zoe companies is temporary. It will be removed if Mr Carroll loses his Supreme Court appeal next Tuesday on the High Court’s refusal to appoint an examiner.
It is the appointment of an examiner that secures the process of court protection. The High Court has the right to refuse the appointment of an examiner and did so in the case of the Zoe companies last Friday, when Mr Justice Peter Kelly suggested that a survival plan was “fanciful”. But if Mr Carroll were to win his appeal and an examiner rather than a receiver was appointed, it would give the Zoe companies the possibility, in theory, of surviving.
Under an examinership, the company’s creditors cannot recover their money while efforts are made to keep the company running. The period in which the examiner can agree a rescue plan with the company’s creditors usually lasts about 70 days, with the possibility of a 30-day extension. After this point a “scheme of arrangement” must be agreed or the company will go into receivership or liquidation.
So what is the difference between a receiver and a liquidator? A receiver sells particular company assets on behalf of the lenders, so that they can get their money back. In this case, ACCBank has security over lands in the Dublin Docklands and can seek to appoint a receiver to sell these lands. Once a receiver raises enough money to pay back the lender, his job is finished. When a company is in receivership, its powers and the authority of its directors are suspended in relation to the assets affected by receivership.
A liquidator takes over the full powers of the directors and the company’s activities stop. The liquidator can sell any company property and wind the company up. Anyone can act as an examiner, receiver or liquidator, although in practice they are usually accountants.
