A High Court hearing into an application for court protection and the appointment of an examiner to companies in Liam Carroll's beleaguered Zoe development group has been adjourned until next Monday.
Announcing the adjournment, Mr Justice Frank Clarke said that once the hearing is concluded he will require at least seven days to consider his ruling which means that there were be no judgement in the case until September 14th.
At this morning’s hearing, the Dutch-owned ACCBank described as "aspirational and speculative" the application for protection being made on Mr Carroll’s behalf.
The bank, which is opposing the examinership petition from seven companies in the group, is seeking the appointment of a liquidator to two companies and a receiver to seize control of another four to recover unpaid loans of €136 million.
Counsel for the bank, Lyndon MacCann SC, told the High Court it must consider evidence on whether each of the seven companies have a reasonable prospect of survival and that insufficient evidence had been provided to support this.
Mr MacCann said that evidence had been provided for the Zoe Group of 51 companies "in the round" and a survival plan had been submitted on a petition of seven companies. However, there was no individual evidence for the other 44 companies.
"So, little information has been put forward for individual companies," he said, adding later that the group's survival plan was not in conformity with the requirements of the legislation permitting the appointment of an examiner.
"Paltry evidence" had been offered for why a seventh company, Royceton, which provided architectural, engineering and quantity surveying services to the group, had been included in the second examinership application, he said.
He said that the first application for examinership from six companies in the group had failed before the Supreme Court because of insufficient evidence.
No reason had been put to the court why Danninger, the main development company in the group, was not seeking court protection by applying for the appointment of an examiner, the court was told by ACC's representative.
A number of creditors of Danningers have made representations to the court supporting the second application.
Counsel said that "hostility" had been shown to Danninger between August 2008 and April 2009 when nine winding-up petitions were filed against the company by unpaid creditors. "Presumably they were paid off," he said.
This was an example of the risk facing the company but that the court was not being told about this, he said.
Mr MacCann said that the court had not been provided with "individual analysis of the recoverability of loans" to Vantive Holdings and Morston Investments, the two holding companies at the apex of the group which channelled bank loans to companies within the group, or whether these two companies have a reasonable prospect of survival.
He said that Ulster Bank had taken steps to protect the security on the group's shareholding in food company, Greencore, which were supporting the bank's loans to the group. This stake was the "jewel in the crown" in terms of realising assets, but that there was nothing in the group's submissions to the court in relation to this, Mr MacCann said.
ACC's counsel said that the survival plan would lead to the "roll-up" of debt and increase the exposure of particular companies in the group to individual institutions at the end of the envisaged three-year rescue period.
He said that ACC was doing what it could to "call in" and recover its loans and that the court was being asked to force a two-year moratorium on interest and loan payments on the bank.
Mr MacCann said this was a business plan that "doesn't come within the broadest rubrics" envisaged by the examinership legislation, saying that it was essentially "a deferred receivership".
He described it as "a flawed business plan from the very outset".
Earlier, counsel for the seven Zoe companies said that they proposed rolling up and postponing interest payments totalling about €24 million to five lenders up to July 2011 as part of a survival plan.
Bill Shipsey SC, for the seven companies, said that interest roll-up "tended to have a dirty connotation to the layman" when in fact it was a common part of development lending where there was no prospect of income for a period of time.
Mr Justice Frank Clarke asked about the companies' chances of survival when they "come out of the incubator" in 2011 or whenever the rescue plan decided by an examiner may end in light of the roll-up of interest.
The judge noted the business plan showed interest roll-up would decline until the end of 2010 but then increase thereafter until the plan ended in July 2011.
Mr Shipsey said that interest roll-up would have "a significant bearing" on the group over the coming three years.
The judge also observed two of the group's developments which were key to its survival plan required finance from two lenders, Anglo Irish Bank and Bank of Scotland (Ireland), to complete buildings that had been pre-let to the banks.
Counsel for ACC said it would refer to the prospects for the economy and the property market in evidence as part of its case.
