Property developer Liam Carroll has failed to secure court protection for six companies in his Zoe Group, leaving him exposed to insolvency proceedings from banks owed €1.2 billion by the group.
The Supreme Court refused to overturn a High Court ruling last month rejecting the appointment of an examiner to his six companies which would have given him breathing space from his debts.
The appointment would also have given him time to formalise a three-year business already agreed with seven of eight banks owed money by the group and which were in support of his survival plan.
Mr Carroll had sought protection for two holding companies in the Zoe Group – the Jersey-registered Morston Investments and Vantive Holdings – and four related trading companies.
The Supreme Court found that it was not possible for the court to reach any conclusion about the prospects of survival of the companies as a going concern “in the absence of any evidence about the likely future development of the property market”.
The court found that in order to persuade it that the companies have a reasonable prospect of survival “it is perfectly obvious that the some evidence of likely improvement in the property market is absolutely essential”.
The court found that neither Mr Carroll or the independent accountant report on which the group’s survival plan was based “makes any attempt to supply this deficiency”.
The court said the opinion of the independent accountant is “explicitly based on a number of assumptions, which are not verified by evidence”.
The accountant refrains from expressing any opinion about the valuations, nor have the valuers who have made the assumptions given any evidence, nor have their reports been given in evidence, the Supreme Court concluded. The court said the independent accountant’s report had not been based on evidence.
“Thus it cannot be of any value in assisting the court to determine whether the companies have a reasonable prospect of survival,” said the court in a ruling delivered by the Chief Justice, Mr Justice Murray, Mrs Justice Denham and Mr Justice Fennelly.
The court said that the basis on which the banks support the appointment of an examiner has not been articulated to the court and no opinion has been expressed on their behalf that the appointment of an examiner could reasonably be expected to result in the survival of the company.
The judges concluded that Mr Carroll’s companies had “not established that its strategy for the future orderly disposal of the key assets of the company is credible or reasonably viable”.
Last week, the Supreme Court granted court protection to several companies in Mr Carroll’s troubled Zoe building group pending the outcome of the appeal against the High Court’s refusal to appoint an examiner to them.
Counsel for the companies argued 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, which have bank borrowings of some €1.1 billion, could achieve a surplus of some €300 million in three years.
The Supreme Court placed a temporary stay until a full appeal hearing today on Mr Justice Kelly’s order after finding the companies had arguable grounds of appeal against it.
ACCBank, whose demand last month for repayment of €136 million loans led to the application for protection, had opposed the stay.
