Court gives protection to Carroll companies

THE SUPREME Court has granted court protection to several companies in developer Liam Carroll’s troubled Zoe building group pending the outcome of their appeal next week against the High Court’s refusal to appoint an examiner to them.

Michael Cush SC, for the companies, argued Mr Justice Peter Kelly made a number of errors when refusing examinership, including setting out his own views on the state of the property market and rejecting as “fanciful” claims the companies, which have bank borrowings of some €1.1 billion, could achieve a surplus of some €300 million in three years.

The three-judge Supreme Court with Chief Justice John Murray, presiding and sitting with Mr Justice Niall Fennelly and Mr Justice Nicholas Kearns, placed a temporary stay until a full appeal hearing next Tuesday on Mr Justice Kelly’s order after finding the companies had arguable grounds of appeal against it.

ACCBank, whose demand last month for repayment of €136 million loans led to the application for protection, had opposed the stay.

Rossa Fanning, for ACC, said it initially adopted a position of “guarded neutrality” to examinership but, having reflected on the High Court ruling, now wanted the Supreme Court to affirm that refusal.

Counsel also argued there was no jurisdiction under the relevant provisions of the Companies Act for a stay on a refusal of examinership.

All other banker creditors, including AIB and Bank of Scotland Ireland (who between them are owed some 64 per cent of the companies’ loans) supported the companies’ application, with the Revenue Commissioners adopting a neutral position.

Mr Justice Kelly had last Friday refused court protection to the six companies, on whose fate the other 51 companies in the Zoe group depend, after rejecting as “fanciful” and “lacking in reality” survival proposals heavily dependent on a greatly improved property market.

He also said the proposed survival scheme seemed directed at helping shareholders whose investment has proved to be unsuccessful, which was not the objective for which examinership legislation was envisaged.

The petition for protection is by Vantive Holdings which, with Jersey-registered Morston Investments Ltd, is the parent companies of about 50 companies known as Zoe Developments. It was moved after four companies – Villeer Developments, Peytor Developments, Caragh Enterprises Ltd and Parlez International Ltd – were presented with demands from ACC for repayment of loans.

Yesterday, Mr Cush said that unless a stay was granted on the refusal an appeal might prove pointless as ACC had indicated no comfort for his clients and could take whatever steps it considered fit.

Counsel said his side had three “very strong” grounds of appeal. The first was that the examinership application was moved in the “highly unusual” circumstances of the companies having agreed a business plan six months ago with 90 per cent of their banker creditors, who were very positive about the plan.

Mr Cush also argued the High Court erred in a second respect in how it considered the property valuation element of the application.

The third ground of appeal was that the High Court “misunderstood” the basis of the turnaround anticipated for the companies, Mr Cush said.