ANALYSIS:WILDLY DIVERGENT scenarios were painted in the High Court yesterday for the best- and worst-case outcomes facing Liam Carroll's property development companies within his Zoe group.
If the group can work through its proposed three-year rescue plan, which includes a two-year moratorium on bank interest, it could emerge with a surplus of €300 million. If liquidated, it faces a shortfall of more than €1 billion.
Mr Justice Peter Kelly must weigh up this and other matters before he decides on Friday afternoon whether to extend the court protection by appointing an examiner to six companies within the Zoe Group of 51 companies.
The judge must conclude whether the six companies have a reasonable prospect of survival. Yesterday, he expressed reservations while raising queries about the companies’ survival plan.
He pointed out that the proposed scheme involved “pouring” further borrowings into developments over the next three years at a time when the office market was grossly oversupplied and the residential market was as “flat as a pancake” with no signs of revival.
Michael Cush SC, for the companies, said that one company under the court’s protection, Vantive Holdings, was “clearly insolvent, as are three related companies”.
However, he said the examinership could give the companies “breathing space” to trade out of their difficulties by developing and selling properties over time. He said the companies proposed no writedown of the group’s bank debts which, court filings show, totalled more than €1.2 billion.
The companies were in “an almost unique” position because they had “pre-existing support” from almost all their banks, he said. Only ACCBank, whose threats precipitated the application, had opposed the rescue plan.
The companies said in submissions to the court that the Zoe group had investment properties worth €411 million, completed residential developments worth €193.7 million, projects under development of €251 million and a landbank worth €546.9 million.
The valuations came from CBRE and Hooke McDonald at December 2008 and assumed the development of existing sites and an orderly sale of assets over the three years of the rescue plan.
In response to a query from the judge, Mr Cush said the two estate agents had valued properties for Mr Carroll’s group in the past.
One of the sites that posed difficulties for the group was a large development at North Wall Quay, where it was developing the new headquarters of Anglo Irish Bank.
The court heard the independent accountant’s report, which assesses Zoe’s survival prospects, took four days to draft.
Matters were complicated for the court by the “extraordinary” number of directorships held by the principals of the companies, the judge said.
The court had to deal with “a maze, a spider’s web” of companies, he said.
Rossa Fanning BL, for ACC, said the bank was “guardedly neutral” on the proposed examinership, but with the advent of legislation creating Nama, the State’s “bad bank”, ACC may change its attitude and make an application to court if the legislation materially prejudiced its position.
