THE FUTURE of a significant part of Liam Carroll’s property empire hinges on an appeal to a special sitting of the Supreme Court next Tuesday. The property magnate’s latest move comes after the High Court refused to extend court protection to six of his companies.
Mr Justice Peter Kelly’s decision to refuse to appoint an examiner to six companies within Mr Carroll’s Zoe group, which owes eight banks €1.2 billion, leaves the developer’s business vulnerable to insolvency action by Dutch-owned ACCBank and potential collapse.
The bank was the only lender to the group which refused to accept its survival plan to save the business by developing existing sites and selling properties over three years.
ACC had threatened to liquidate a number of companies in the business, potentially toppling the entire group, unless it was repaid debts totalling €136 million.The bank did not disclose its next move, telling the court it could not give “any comfort” to the firms which had provided securities on the bank’s loans.
Refusing an application to appoint an examiner to Zoe, Mr Justice Kelly described the group’s rescue plan as “lacking in reality”.
The appointment of an examiner would have given Mr Carroll’s group 100 days’ breathing space from its debts to implement a survival plan.
The judge said the company proposed developing and selling properties over three years, with further borrowings from its banks, in a “grossly oversubscribed” commercial market and in a residential sector that is “hardly moving at all”.
He described as “a remarkable turnaround” a projection by independent accountant Fergal McGrath, who backed the rescue plan, that the group would move from insolvency and a deficit of more than €1 billion to a surplus of €290 million after three years.
The judge said this degree of optimism “borders, if not actually trespasses, on the fanciful”. He said that the group’s plan “seems envisaged to help shareholders whose investment has proved to be unsuccessful”.
This did not meet the test for examinership, the judge said, and he did not believe the companies had a reasonable prospect of survival. The group did not plan to write down any debt or make new investment, both of which feature in examinership cases, he said. The judge granted “with misgivings”, he said, a stay on his ruling refusing to appoint an examiner.
He extended the court’s protection over six Zoe group companies until they lodge the appeal.
The six companies secured court protection just over a fortnight ago after ACC’s repayment demand threatened their survival.
Mr Justice Kelly said the group’s rescue plan involved “extraordinary” forbearance by the group’s banks in agreeing to a two-year moratorium on interest payments where they would effectively refrain from calling in loans.
This forbearance was “remarkably absent” when banks dealt with smaller borrowers, he said.
“In truth the banks can do little else but forbear because if they take action to recover the monies due to them by these companies, they will bring about a collapse of the house of cards.”
This comprised Mr Carroll’s holding company, Vantive Holdings, five related firms and the wider Zoe group of companies.
The report by Mr McGrath of Dublin accountancy firm LHM Casey McGrath, auditors to the companies, claimed the group had a reasonable prospect of survival.
The report, which has been seen by The Irish Times, valued the group’s land and its completed and work-in-progress projects at €991 million, and its investment properties at €411 million.
Mr Justice Kelly said he had the “gravest reservations” about these projections given the extraordinary collapse in the market.
They were based on discussions with the companies’ management, he said.