The High Court will hear a second attempt by Liam Carroll’s besieged Zoe development group to secure protection from creditors on September 1st.
The court agreed on Friday to give companies in the group a second chance to seek the appointment of an examiner in a bid to ensure its survival.
Outlining the reasons for Friday’s ruling this morning, Judge John Cooke said the court found there are good grounds to allow the second petition to proceed to a full hearing.
Mr Carroll’s development group, which has bank debts of €1.2 billion, is seeking the appointment of an examiner after ACCBank, which is owned by Dutch banking group Rabobank, demanded immediate repayment of €136 million in debts.
A provisional liquidator has been appointed to two of the companies seeking protection on the back of an application by ACC, which has also appointed a receiver to four others that are seeking the appointment of an examiner to devise a rescue plan.
Previous efforts to secure protection and the appointment of an examiner to companies in the group were rejected by the High Court and Supreme Court.
Mr Justice Cooke said this morning that the court was satisfied that allowing a second petition to be heard did not constitute an abuse of process or bad faith.
ACC had argued that the second attempt was “extraordinary and unprecedented” and an abuse of process because the issue had already been considered and rejected by the court. The court was satisfied that the material provided address deficiencies identified by the Supreme Court, the judge said.
The companies, led by Vantive Holdings and Morston Investments, two firms at the apex of the corporate pyramid of the 51-company Zoe group, are willing to submit a detailed business plan, including detailed future property valuations, to support their application.
The judge said that whatever the reason for the companies withholding the business plan in the first petition for protection, and however misguided and mistaken that decision was, it did not appear to be a “malevolent” attempt to mislead the court.
He said Mr Carroll’s withholding of the information appears to be motivated by fear of public disclosure that may jeopardise the prospects of realising the best prices in time, he said.
The judge said that implicit in the petition was the suggestion that allowing the court to hear the second application would protect the shareholders, which was one of the reasons why Mr Justice Peter Kelly, sitting in the High Court, rejected the group’s bid for protection in the first petition last month.
Mr Justice Cooke said that the court may reach this conclusion when it hears the second petition in full.
However, at this stage, the interests of employees, creditors, subcontractors and trade suppliers, the overwhelming majority of whom were supporting the application, should not be affected by the mistakes, misjudgments and perhaps misconduct of shareholders, he said.
The companies also submitted letters of support from the group’s main lenders and evidence from employees and suppliers to Mr Carroll’s main development firm, Danninger.
Lyndon MacCann, senior counsel for ACC, which opposed both the hearing of the petition and the attempt to appoint an examiner, said that the bank would be submitting affidavits from a bank official, a property valuer, an economist and an insolvency practitioner to respond to the companies' claims that they have a reasonable prospect of survival. The judge gave the bank until Friday at 6pm to submit the affidavits to the seven Liam Carroll-controlled companies seeking
The companies said that they would be willing to provide property valuations to ACC on the condition that they be kept confidential until the full hearing.
They have asked that the business plan, which contains detail valuations on individual properties in the group, remain confidential, Mr Justice Cooke said that this would be a matter for the judge presiding over the full hearing and that the companies agreed to disclose these valuations publicly if the court did not permit their airing in private.
ACC had argued that the companies made a tactical and strategic decision to deliberately withhold the key business plan showing property valuations in the first, failed application.
Counsel for ACC said that the bank considered it might be better to defer a possible appeal to the Supreme Court on Mr Justice Cooke’s ruling until the High Court had heard the second application in full.
The judge said there was no difficulty legally with a company presenting a second petition for examinership and he disagreed with ACC’s claim that the new petition was doomed.
He said that the absence of written evidence showing support from the companies’ banks in the first application for protection was “less than satisfactory”.
The judge said that he would have expected to hear details about which bank was asked for support, what was being asked of them and what their 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 given the current difficult economic environment.
Mr Justice Liam McKechnie is scheduled to be the vacation judge sitting in court next Tuesday when the full hearing begins. The court was told today that the hearing is expected to last two days.
