THE FUTURE of developer Liam Carroll’s heavily insolvent Zoe group is now seriously in doubt after the Supreme Court ruled yesterday it was not entitled to continue with a second bid to secure court protection from creditors.
The decision means the group cannot go ahead with its planned Supreme Court appeal against a second High Court refusal to appoint an examiner to key Zoe companies.
The liquidation of those Zoe companies has been on hold pending the outcome of that appeal and a stay continues on that liquidation until next week when the group, in separate appeal proceedings, will urge the court to exercise its discretion not to wind up the companies.
The three-judge Supreme Court yesterday granted ACCBank’s appeal against a decision by Mr Justice John Cooke last August to allow Zoe to bring its second petition for protection, the first petition having been refused by both the High and Supreme courts in decisions last July and August.
Mr Justice Frank Clarke heard the second petition last month and refused to grant protection on grounds the group had failed to show it has a reasonable prospect of survival.
For its second petition, the group had exhibited evidence concerning its business survival plan which, against legal advice, it chose not to exhibit during the hearing of the first petition.
When refusing the first petition, both the High and Supreme courts had strongly criticised the absence of evidence to support the group’s claims of a reasonable prospect of survival.
In bringing its second petition, Michael Cush SC, for Zoe, said Mr Carroll had decided to withhold the business plan from the first hearing before Mr Justice Peter Kelly in circumstances where Mr Carroll was admitted to hospital a short time later.
There was no malevolence in Mr Carroll’s decision and the other Zoe directors had underestimated the impact of Mr Carroll’s health problems on his capacity to make such decisions, Mr Cush said.
In its appeal against the decision to allow the second petition, ACCBank, which is owed some €136 million by Zoe companies, argued the withholding of the business plan on the first occasion was an abuse of court process and the second petition should not be allowed proceed.
Allowing that appeal yesterday, the Chief Justice Mr Justice John Murray said the group had relied on material evidence in its second petition which it had “consciously and deliberately” chosen not to put before the courts in the first petition despite that evidence being available to, or obtainable by it, on the first occasion.
While there was no bad faith by the group, the bringing of the second petition in such circumstances was “an abuse of the process of the courts and the administration of justice” and it should proceed no further, he said.
The Chief Justice, sitting with Ms Justice Susan Denham and Mr Justice Nial Fennelly, said the court would give its full reasons for its decision allowing ACC’s appeal on October 14th when the group’s separate appeal against winding-up orders for some Zoe companies will also be mentioned.
The issue of costs of the protection proceedings will also be addressed then and Lyndon MacCann SC for ACC, signalled yesterday it will be seeking its costs.
The application for protection was by Vantive Holdings and Morsten Investments (the key funding companies in the Zoe group), Villeer Developments, Peytor Developments, Carragh Enterprises Ltd, Parlez International Ltd and Royceton.
Carroll case: What happens next?
THE SUPREME Court ruled yesterday that companies in Liam Carroll’s property development business, the Zoe Group, should not have been allowed to proceed with a second bid for protection after a first attempt was rejected.
This means the group cannot appeal the High Court’s rejection of the second application seeking court protection and the appointment of an examiner to put in place its long-term rescue plan.
The group can still appeal a decision by the High Court last month to wind up two companies at the apex of the group – Vantive Holdings and Morston Investments. However, given that both companies are heavily insolvent and that they are among the companies which failed to secure court protection under a period of examinership, it will prove tricky to argue that they should not be liquidated as agreed by the High Court.
A stay on the winding up of the two companies remains in place until at least next Wednesday when the matter will be before the Supreme Court again.
A receiver appointed by ACC to four Zoe companies last August following the failure of the first bid for protection cannot be removed following yesterday’s ruling.
The court’s decision is also expected to lead to the appointment of receivers by seven other lenders to the group over the coming days as the banks each protect their own loans to the group, which owes a total of €1.3 billion. Receivers will have first call, ahead of any liquidator, on assets securing loans if Vantive and Morston are wound up next week.
Simon Carswell
