LIAM Carroll’s construction empire looks set to crumble after the High Court yesterday rejected a second application for an examiner to be appointed to the heavily indebted consortium.
In what could be the first major test for NAMA, seven companies in the Zoe group controlled by the reclusive developer sought court protection to prevent them being liquidated by creditors.
However, Mr Justice Frank Clarke refused the application and severely criticised a number of inaccuracies in an independent accountant’s report by senior KPMG partner, David Wilkinson, that claimed Zoe had a viable future.
Mr Wilkinson’s conclusion that Zoe’s assets including income from property sales, rental income and dividends from Mr Carroll’s shareholding in Greencore and the Irish Ferries group could fully cover 100% of its interest and debt repayments as well as all overheads was “seriously wrong”, he said.
The ruling puts the future of the group – which has total debts of €1.2 billion – in jeopardy as Mr Carroll has admitted the companies are highly interdependent.
It also increases the likelihood that several banks may also make similar moves to liquidate the assets of other leading developers who face bankruptcy.
Mr Carroll had sought the protection of the court for Zoe because ACC Bank had threatened to take insolvency proceedings against his companies to recoup loans worth €136 million.
However, the developer was supported by seven other banks including AIB, Anglo Irish Bank, Bank of Ireland, Ulster Bank and Bank of Scotland, who granted Zoe a two-year moratorium on interest repayments.
Lawyers for ACC will apply today to wind up two key companies in the group – Vantive Holdings and Morston Investments – to whom a provisional liquidator has been appointed following an unsuccessful petition for examinership that was rejected by both the High Court and Supreme Court earlier this summer.
Although Mr Carroll may still appeal the ruling to the Supreme Court, legal experts believe this would have little chance of success.
While Mr Justice Clarke said his decision had been strengthened by answers provided by representatives of Mr Carroll yesterday, he will not give his detailed ruling until 2pm today.
It is unclear if the ruling will impact on plans for the Government’s “bad bank,” as it is widely believed that most of Mr Carroll’s property loans will pass over to the National Asset Management Agency rather than be repaid through a fire-sale of Zoe’s properties.
Fine Gael enterprise spokesman, Leo Varadkar, said it highlighted “the conspiracy of silence that exists between the Government, large Irish banks and big developers”.
“The banks don’t want to publicise the likely huge losses that will be made on these loans before they pass them over to NAMA and the taxpayer,” he remarked.
The decision came as the Government published revised legislation to establish NAMA. The amended bill contains key changes, including a mechanism for risk-sharing to ensure banks join the taxpayer in bearing the risk of potential losses.
© Irish Examiner Ltd. All rights reserved