ANALYSIS: After failing to secure protection from the High Court for a second time last week, lawyers for the group told Mr Justice Frank Clarke yesterday it was appealing his rejection of their long-term survival plan. This means the group has an unprecedented fourth legal opportunity to prevent collapse.
The judge has nonetheless decided to hear winding-up petitions from Dutch-owned ACCBank for two companies at the apex of the group, Vantive Holdings and Morston Investments. He will decide at 2pm today whether to appoint a liquidator to the two companies. Given that the group has said that it plans to appeal his earlier ruling, the appointment may be put on hold (if he agrees to liquidate the companies), pending the appeal at the Supreme Court.
The decision to hear the liquidation petitions before the Supreme Court appeal makes sense – if the highest court in the land throws out the appeal, the liquidator can then automatically take control without the case having to return to the High Court for hearing.
The group has twice failed to secure protection from the High Court and, for the second time, is turning to the Supreme Court for relief to trigger its rescue plan.
The Supreme Court previously said the group had failed to provide sufficient evidence of a recovery in the property market and proof of ongoing financial support from its main lenders to fund the plan. The group submitted a more comprehensive body of evidence in the second High Court application but Mr Justice Frank Clarke poked significant holes in the case.
In a further twist, Rossa Fanning BL, for ACC, said that the bank may appeal an earlier High Court ruling by Mr Justice John Cooke which allowed the group make the second petition for protection before Mr Justice Clarke.
Bill Shipsey SC, for the Zoe companies, also said the group may seek to appeal Mr Justice Clarke’s decision to put Vantive and Morston into liquidation if the judge so decides today. This could lead to criss-crossing appeals on various decisions at the Supreme Court as ACC and Zoe battle it out.
Zoe’s court bids are turning from a battle into a long war. They have one obvious effect – they push the heavily indebted group ever closer to the date when the Nama “bad bank” becomes operational. The Dáil returns tomorrow to debate the draft Bill establishing the agency and, if all goes according to the Government’s schedule, Nama may be up and running by late next month. Mr Carroll’s group, which owes €2.8 billion, is likely to be one of the agency’s first and biggest customers. The Zoe companies and their advisers have argued in court that Nama could benefit them as it will generate greater amounts of credit, stimulating market activity.
Nama could also buy the loans of Zoe’s domestic lenders, which account for more than half of its €1.3 billion bank debts. The difficulty is that ACC will not qualify for Nama, nor does it wish to partake. Mr Shipsey argued that ACC had “a self-help remedy” – it could appoint receivers to property companies which had guaranteed its unpaid debts of €136 million.
The bank’s winding-up petitions against Vantive and Morston represented “a doomsday threat”, said Mr Shipsey, as ACC sought to force other lenders to buy out its debt or force the liquidation of one of the largest property groups in the country, bringing all its properties onto the market at one time.
Mr Fanning said the group had “enjoyed every conceivable indulgence” from court. This had to end, he said. The saga continues today.
