Zoe group granted leave to seek examiner

A sick and hospitalised Liam Carroll and the fellow directors of the Zoe group were granted leave of the High Court tonight to present a new petition seeking the appointment of an examiner to the troubled property group.

Mr Justice Eamon de Valera said he would would allow the application to be made next week only on the strict undertakings not to prejudice the position of the provisional liquidator and receiver appointed to the firm at the request of ACC bank.

Mr Michael Cush SC for for the Zoe companies told the court Mr Carroll was in hospital and in no position to give instructions, but the application was being made in the name of his fellow directors on behalf of all the Zoe companies plus one, Royceton Ltd.

The companies, whose appeal against the High Court's refusal to appoint an examiner to was dismissed by the Supreme Court on Tuesday, claimed that its new petition contains information which was not included in its previous application to have an examiner appointed to the firms.

This information, it was argued, supported their claim that the companies, which have borrowings of more than €1.1bn, can survive as a going concern.

Late tonight at the High Court Mr Justice deValera was asked by Mr Cush to be allowed present a petition to the Court to have the companies given the protection of the court from its creditors.

The petition to have an examiner appointed to Liam Carroll's firms was brought by Vantive Holdings which, with Jersey-registered Morston Investments Ltd, are the parent companies of around 50 companies known as Zoe Developments.

The other companies include Villeer Developments, Peytor Developments, Caragh Enterprises Ltd and Parlez International Ltd. The firms have a very substantial portfolio of investment and development outlets.

Michael Cush SC for the companies said the application was moved at a late hour because if a petition was not moved within a three-day period of the appointment of a provisional liquidator his clients would be forever be "shut out" and not allowed seek the appointment of an examiner.

Counsel said that in its judgment the Supreme Court found the petition deficient due to the absence of information about the on-going provision of finances, particularly beyond the period of protection, to the Zoe group.

The Supreme Court also found the petition lacked evidence to validate assumptions made that the property market would improve over the next three years, including property valuations referred to in documents but not exhibited.

Counsel said that both situations had now been addressed in that letters from the banks in relation to finance had now been provided, and that affidavits of valuations carried out by Hooke and McDonald and CRBE were now before the court.

Counsel said that other evidence in the petition, including a new more extensive independent accounts report, had been prepared and evidence from Goodbody's chief Economist on the predicted turnaround in the world economy in 2011 and the Irish economy in 2012 showed that the firms had a reasonable prospect of survival.

Counsel said that many people had worked late and many hours to prepare the petition.

The application was opposed by lawyers for the receiver and ACC bank on the grounds that the Supreme and High Court had already refused to allow the the companies go into examinership.

The Zoe group sought to go into examinership due to a paralysis of apartment sales, planning difficulties, the economic slowdown and the decline in value of investments it has made. It is estimated that in a winding-up scenario the deficit would be €1bn.

On Tuesday the Supreme Court held that the companies, which have borrowings from financial institutions of €1.1bn, in seeking the protection of the court had failed to demonstrate that they could survive as a going concern.

The Supreme Court dismissed the companies appeal against the refusal on July 31 last of Mr Justice Peter Kelly to appoint an examiner.

Mr Justice Kelly described the firm's assertions the companies could trade their way out of their difficulties based on trading projections by management and December 2008 valuations of commercial and residential property assets as being "fanciful".

ACC Bank, whose demand for repayments of €136m loans led to the application for protection, had opposed the appeal.

On Wednesday, following an application by ACC, the High Court appointed a provisional liquidator, Mr Declan Taite of FGS Partnership to the two companies after being informed that the firms are unable to pay their debts.

The court heard that that the firms are grossly insolvent. Vantive has deficits of €369m while Morsten has a deficit of €361m. That application is due back before the courts on September 9 next.