Zoe firms get second chance to apply for protection

LIAM CARROLL CASE:THE HIGH Court has allowed a second application for protection for seven companies in Liam Carroll's beleaguered Zoe development group to be heard in full.

Mr Justice John Cooke has permitted the group’s fresh attempt to appoint an examiner to seven of its companies in a bid to devise a long-term plan for their survival.

The decision gives the companies another chance to plead their case for court protection after the first petition was rejected by the High Court last month and later upheld by the Supreme Court.

The judge said there were “strong reasons” why a new petition should be fixed for hearing.

Mr Justice Cooke said the court did not discount the serious reservations about the explanations given for the absence of letters of financial support from some of its banks or why a mistaken and misguided decision not to submit a crucial business plan in the first petition for protection was made.

He said it was clear that the overwhelming majority of creditors, employees and companies conducting business with the group supported the petition and a second attempt was permitted.

“There is a clear imperative in allowing the petition to proceed to be heard,” he said, adding that the full hearing would decide whether the “defects” outlined by the High Court and the Supreme Court in the first unsuccessful application had been “adequately answered”.

The judge will decide on Monday when the full hearing of the application for protection will take place and will give directions on the position of the provisional liquidator and receiver appointed to a number of the companies on the back of applications by ACCBank.

Earlier yesterday, counsel for the Dutch-owned bank, which opposed the petition and is seeking to recover loans of €136 million, argued that the companies had made a “tactical and strategic decision” to withhold key information on property valuations in their first failed bid.

Lyndon MacCann SC, for the bank, said they made the “same deliberate tactical and strategic decision” to withhold the evidence in their Supreme Court appeal.

The judge said that “past mistakes and misjudgments and perhaps misconduct” of directors ought not to affect the interests of creditors, employees and other companies that have business with the group, all of which supported the new bid for protection.

The earlier appeal was dismissed by the Supreme Court after it found that the companies failed to provide evidence on prospective property valuations and future financial support for development.

The companies, led by Vantive Holdings and Jersey-registered Morston Investments, claim they have addressed issues in the new petition which led to the previous application being rejected.

Before the ruling, ACC’s counsel had described the fresh attempt at protection as “extraordinary and unprecedented” in the history of corporate litigation.

Mr MacCann said the decision not to submit key financial information in the first petition was “dictated” by Mr Carroll. While fellow directors disagreed, they acquiesced with the deliberate withholding of evidence, he said.

The companies sought to justify the withholding of evidence because of the stress that Mr Carroll was under at the time and that this “somehow impaired his judgment”, Mr MacCann said. “There is no suggestion that Mr Carroll did not know what he was doing.” .

He added: “In a time of stress a bad decision was made, but that bad decision was perpetuated by not submitting a crucial business plan in the Supreme Court appeal”.

Mr MacCann said the companies were trying to distance themselves from that submission and seeking to “start afresh” in a new petition.

“That, at the very least, is an abuse of process,” he said.

However, the judge concluded that the second petition was “not an obvious abuse of process”.