ACCBANK has hardened its stance against developer Liam Carroll, stating before the Supreme Court that it is opposing his application for court protection against creditors of his troubled Zoe Developments group.
The Supreme Court yesterday extended Zoe’s protection from its creditors until the full hearing of its appeal next Tuesday against the High Court’s refusal last Friday to grant an examinership to the group, whose debts total €1.1 billion.
Mr Carroll, one of the State’s largest property developers, secured a moratorium for two or three years on the repayment of Zoe’s debts from most of its banks last December. His survival plan, described as “lacking in reality” by the High Court, involves developing existing sites and selling properties over three years.
ACC was the only one of Zoe’s lenders that did not accept the plan and its demand last month for repayment of a €136 million debt led to Zoe’s application for examinership.
In the Supreme Court yesterday, Michael Cush, SC for Zoe, described ACC’s actions as a “solo run by the stray creditor”.
ACC had adopted a position of “guarded neutrality” in respect of Zoe’s application for examinership, a process that temporarily protects a business from creditors while it works on a rescue plan.
Having considered the High Court’s refusal to grant an examinership, ACC told the Chief Justice John Murray yesterday it wanted the Supreme Court to affirm the High Court ruling.
Opposing a stay on that ruling yesterday, Rossa Fanning for ACC argued that there was no jurisdiction under the relevant provisions of the Companies Acts for a stay on the refusal of an examinership.
However, the Chief Justice said there was a constitutional right of appeal and the normal situation was that a stay was granted if an appeal was brought promptly and there was a stateable appeal.
While satisfied that the companies had arguable grounds of appeal, the Chief Justice said that was not a reflection on the merits of the appeal. An appeal would be moot if the stay was not granted, he added. Sitting with Mr Justice Nial Fennelly and Mr Justice Nicholas Kearns, he placed a temporary stay until the full appeal.
A spokeswoman for ACC, which has aggressively pursued other defaulting borrowers, declined to answer any questions on the change in its stance in relation to Zoe.
Close observers say, however, that ACC is determined to protect its position as it was convinced by the force of the High Court ruling, which said Zoe failed to demonstrate that it had a reasonable prospect of survival.
Mr Cush argued that the ruling in the High Court by Mr Justice Peter Kelly made a number of errors when refusing examinership, including setting out his own views on the state of the property market and rejecting as “fanciful” claims the companies could achieve a surplus of some €300 million in three years.
Mr Cush also argued the High Court erred in how it considered the property valuation element of the application. Mr Justice Kelly, he submitted, had gone beyond the evidence in substituting his own views on the property market for December 2008 valuations provided by two firms of estate agents – CBRE and Hooke McDonald.
The third ground for appeal was that the High Court “misunderstood” the basis of the turnaround anticipated for the companies. The High Court took the anticipated deficit of €1.1 billion on a winding-up basis and queried how the companies could achieve a €300 million surplus within three years.
Mr Cush said the €1.1 billion figure was the “wrong starting point” and the correct starting point was the current deficit of some €260 million.
Other creditors – AIB, Bank of Scotland (Ireland), Anglo Irish Bank, Ulster Bank and KBC – supported the examinership application. The Revenue adopted a neutral stance.