LENDING BANKS are free to appoint receivers to Zoe group companies Vantive Holdings and Morston Investments after the companies lost the High Court’s protection yesterday.
Mr Justice Frank Clarke yesterday gave ACCBank the go- ahead to proceed with the liquidation of Vanative, Jersey-registered Morston and a number of other companies that are part of developer Liam Carroll’s Zoe group.
However, he stayed his order for a week, giving Zoe time to begin an appeal to the Supreme Court.
The judge did not put a similar stay on his refusal last week to appoint an examiner to the companies, meaning that they have lost the High Court’s protection against their creditors. Lawyers said later that this would allow banks who have given secured loans to the companies to appoint their own receivers. The group’s other creditors include State-owned Anglo Irish Bank, AIB and Bank of Ireland. However, if the appeal goes ahead, any receivers or liquidators appointed would have to stand aside.
ACCBank is seeking the repayment of €136 million from the group.
After Zoe’s first bid to be placed in examinership failed last July, ACC had Declan Taite of Dublin firm Farrell Grant Sparks appointed as provisional liquidator.
The judge directed that he become the official liquidator. This means that the winding up of the group will begin if its appeal fails or does not go ahead.
Mr Justice Clarke last week refused the companies’ second bid to appoint an examiner, a move that would have given them up to 100 days to come up with a rescue plan for the insolvent businesses.
The judge pointed out that as a result of the group’s two court actions, the companies had benefitted from High Court protection from their creditors for “all but four of the last 60 days”.
He said that once a company applied for examinership, it automatically came under the court’s protection from its creditors.
He argued that Vantive and Morston had benefited from this protection for what he called an overlengthy period because their original bid for examinership failed in July. “It stems from the fact that the petitioner got it wrong the first time,” he said.
Making his ruling, Mr Justice Clarke said that ACCBank was the only one of the group’s creditors to oppose its bid for examinership. The others either remained neutral or stayed silent.
At the same time, he said the only parties opposed to the liquidation were other group companies which were also creditors of Vantive, Morston and their subsidiaries.
Mr Justice Clarke said that while he had to take their position into account, he was obliged to attach more weight to ACCBank’s arguments and accordingly would grant its petition to have a liquidator appointed. As the companies involved were insolvent, they could not continue trading. At the same time, he argued that the alternative means by which ACC could enforce its rights would lead be a recipe for procedural disaster.
