A NUMBER of banks owed more than €1 billion by companies controlled by beleaguered developer Liam Carroll attended an emergency meeting yesterday to consider their options as a liquidator was appointed to two of his companies
As the banks met, the High Court appointed a provisional liquidator to two of the main companies in the Zoe group on an application from Dutch-owned ACCBank. The bank secured the appointment of a provisional liquidator in an attempt to recover unpaid debts totalling €136 million.
The court appointed Declan Taite of Dublin accountancy firm FGS to Vantive Holdings and Jersey-based Morston Investments, two companies which sit above about 50 companies at the apex of Mr Carroll’s Zoe group. ACC petitioned the court to place the companies in provisional liquidation following the decision of the Supreme Court to withdraw court protection to the two companies and four related firms.
Counsel for the bank told Mr Justice Iarfhlaith O’Neill the companies were “grossly insolvent” and unable to pay their debts. Rossa Fanning, for ACC, said that any hope of examinership had passed. “These companies have nowhere else to go but liquidation,” he told the court. The court heard the companies have large deficits, €396 million in Vantive’s case. Mr Fanning said they should be “put under the stewardship of an independent solvency practitioner”.
Court filings show that Morston has a deficit of €361 million. The court heard that Vantive is owed debts of €569 million by other group companies and counsel said that every step should be taken to protect its assets.
The appointment of a liquidator will wrest control of two key holding companies within Mr Carroll’s property empire, which owes an estimated €2.8 billion, out of the developers’ hands. The move could also have a domino effect for companies across Mr Carroll’s wider group.
Other banks involved in Mr Carroll’s companies yesterday advanced plans to protect their loans by making preparations to appoint receivers to seize control of companies and properties against which their borrowings are secured.
The appointment of receivers by the banks, which are owed more than €1 billion by Mr Carroll’s Zoe group of companies, would supersede the liquidator and safeguard their loans. However, several banks have adopted a wait-and-see approach and will bide their time until the full hearing to confirm the appointment of a liquidator on September 9th.
A number of the banks, with the exception of ACC, met yesterday to consider a co-ordinated response to the failure of Mr Carroll’s appeal.
Some of the bankers believe the ACC action is an attempt to force the other lenders to pay off the Dutch-owned bank’s loans.
The appointment of a liquidator to two of Mr Carroll’s companies comes as the Government prepares to set up the State “bad bank”, the National Asset Management Agency (Nama), to buy toxic loans from lenders. Mr Carroll’s loans are expected to be among the first and largest assets to be acquired by Nama.
The potential large-scale sell-off of properties held by Mr Carroll’s liquidated companies could set fire sale prices below the intended “long-term economic value” at which the Government intends to buy the loans through the agency. The Department of Finance has said Mr Carroll’s financial difficulties will not affect plans to buy development and related loans with a book value of €90 billion.
The Government will signal the discount or so-called “haircut” that it intends to pay for the property loans on September 16th.
A group representing the country’s fund management companies, significant investors in the country’s publicly quoted banks, said that the Government should resist political pressure to underpay for Nama-bound loans.
Frank O’Dwyer, head of the Irish Association of Investment Managers, said that an “excessive haircut, with any taint of political motivation [and] any sense of ‘let’s stick it to these guys’ would erode confidence”.
However, Opposition politicians said the Supreme Court decision to refuse further protection to Zoe Developments has exposed a fatal flaw in the plan to establish Nama.
Fine Gael spokesman Richard Bruton said the decision showed there was no evidence to suggest that property prices would recover.
“The huge threat from this ill-conceived Nama project is that taxpayers will be forced to overpay the banks for toxic developer loans,” he said.
Labour TD Ciarán Lynch said the court decision had put a serious question mark over the Government’s strategy on Nama.