Court refuses to protect Carroll’s empire

FRESH shock waves ripped through Ireland’s beleaguered property sector last night as one of the country’s largest developers was refused protection in the High Court.

Reclusive billionaire Liam Carroll failed to have an examiner appointed to six of his companies as Judge Peter Kelly delivered a damning verdict on proposed survival plans as “fanciful” and “lacking in reality”.

The decision came as Taoiseach Brian Cowen moved to insist the looming National Assets Management Agency (NAMA) was not a €90 billion “gamble”.

Mr Carroll’s Zoe Developments group, which owes eight banks €1.27bn, was given a stay pending a Supreme Court hearing next Tuesday, but the judge said even this was granted “with misgivings”.

In a damning commentary, Mr Justice Kelly said he could not agree the companies involved had a reasonable prospect of survival, as the arguments their fortunes could be turned around “bordered on the fanciful”.

He dismissed claims of a bounce-back which suggested the companies could turn a €1bn deficit into a €300 million surplus within three years.

The move intensified the political firestorm over NAMA, as the Taoiseach insisted there was no alternative to the proposed “bad bank” soaking up €90bn worth of toxic land deals if financial institutions were to be able free up credit lines to businesses again.

“There’s a huge risk existing for the Irish economy were we not to take this step and initiative.

“The purpose here is not to initiate a gamble. The assumption that there are no present existent risks is a very wrong understanding of the situation,” Mr Cowen said.

Fine Gael and Labour again questioned the viability of the scheme, saying it would be a bad deal for the taxpayer.

However, the Greens stressed Environment Minister John Gormley would be able to insist that the amount quoted by the valuation panel – which decides how much was paid by the State to take on the deals – be marked down if the development involved was bought on the basis of questionable zoning.

Ruling on the Zoe petition, Mr Justice Kelly noted the survival plan involved “extraordinary” forbearance by the group’s banker creditors in agreeing to a two-year moratorium on interest payments and effectively refraining from calling in massive loans.

The judge noted such patience was “remarkably absent” when the banks were dealing with smaller borrowers.

The petition for protection was brought after four companies within the group were presented with demands from Dutch-based ACC Bank for the repayment of €136m.

Mr Justice Kelly said the companies owed an extraordinary sum of money and were made up of “Byzantine complexities” as he noted that ACC had “broken ranks” with other institutions and demanded repayment.

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