Date named for hearing of second petition by group

Zoe in the courts : another chance for examinership:A SECOND attempt by the Liam Carroll-controlled Zoe development group to seek the appointment of an examiner will be heard by the High Court next Tuesday.

Yesterday, Mr Justice John Cooke fixed September 1st for the hearing of a petition to grant seven companies in the troubled group protection of the court. The hearing is expected to last two days and is scheduled to be heard by Mr Justice Liam McKechnie.

The group has bank debts of €1.27 billion, and claims it will collapse if it does not succeed in having an examiner appointed.

The court agreed last Friday to give companies in the group a second chance to seek the appointment of an examiner. Outlining the reasons, Mr Justice John Cooke said yesterday there were good grounds to allow a second petition.

The companies are seeking the appointment of an examiner after ACCBank, owned by Dutch group Rabobank, sought repayment of €136 million in debts.

A provisional liquidator has been appointed to two of the companies seeking protection on foot of an application by ACC, which has also appointed a receiver to four other companies.

Previous efforts to secure the appointment of an examiner to companies in the group were rejected by both the High Court and Supreme Court as they failed to provide evidence including property valuations or future financial support to their case.

Mr Justice Cooke said that he was satisfied that allowing the hearing of a second petition was not an abuse of process or bad faith – contrary to ACC’s claims.

The judge accepted that it was permitted under company law. The judge said that he did not agree with the bank’s view that the fresh application was “doomed”.

ACC has argued that the second petition for protection was “extraordinary and unprecedented” as the issue had already been rejected by the courts.

The group claims the new material it has provided addressed the deficiencies in evidence identified previously by the Supreme Court.

The companies are willing to submit a detailed business plan, including future property valuations, to support their application, as well as letters of support from their banks showing ongoing and future finance for developments.

The judge said that the absence of written evidence in the first attempt for protection showing future financial support from Zoe’s banks, with the exception of ACC, was “less than satisfactory”.

The judge said he would have expected to hear details about which bank was asked for support, what was being asked of them and what the banks’ reactions were.

He said that it was not surprising, given the sheer magnitude of the group’s debt, that no bank was willing to give a written commitment in court of future funding to the group, in light of the current difficult economic environment.

The judge said, whatever the reason for the companies withholding the business plan in the first bid for protection – and however misguided and mistaken that decision was – it was not a “malevolent attempt to mislead the court”.

He said the information had been withheld by Mr Carroll and the court was told this was because his judgment at the time was impaired due to stress.

The judge said Mr Carroll’s withholding of information appeared to be motivated by the fear public disclosure may jeopardise the prospects of realising the best prices for properties over time.

He said the information in the plan was shown to the group’s banks, though ACC pointed out it had not seen valuations on individual properties.

The companies said they would be willing to provide property valuations to ACC on condition they be kept confidential until the full hearing.

Counsel for the bank said it intends to submit affidavits from a bank official, a property valuer, an economist and an insolvency practitioner in response to the claims the companies have a reasonable prospect of survival, meriting the appointment of an examiner.

ACC must submit these papers by 6pm on Friday, the judge said.

The Zoe group is seeking to appoint an examiner, Ray Jackson, a former partner of KPMG, to Vantive Holdings which, with Jersey-registered Morston Investments, is at the apex of a corporate pyramid of about 50 companies in the group.

Court protection is also sought for five other firms: Villeer Developments, Peytor Developments, Carragh Enterprises, Parlez International and Royceton.

Why do Carroll firms want examiner?

THE APPOINTMENT of an examiner would create a standstill situation and breathing space of up to 100 days where the companies are protected from their creditors. This allows the examiner to investigate their prospects for survival and possibly devise a rescue plan.

The firms must make their case for examinership next Tuesday, showing they have a reasonable chance of continuing as a going concern. Mr Justice John Cooke said if they are successful, it will be up to the examiner to determine if they can survive, perhaps under a radically altered structure or with new investment or management.

A scheme of arrangement could then be devised which may involve a loss to creditors, who are owed €1.35 billion by the entire Zoe Group, including €1.27 billion to eight lenders.

In the failed application, the court was told the group did not envisage a writedown of the bank loans. KPMG said in the new independent report supporting the firms' prospects for survival that there may be a €10 million writedown.