Banks prepared to fund debt-ridden Carroll

THE banks are prepared to give property developer Liam Carroll more money, even though his companies have debts of €2.3 billion.

The Supreme Court heard banks – including AIB, KBC Bank, Ulster Bank, Anglo Irish Bank and Bank of Scotland (Ireland) – had agreed to provide finance to pay off third-party unsecured creditors.

They also agreed to give the property tycoon money to fund ongoing development and to put a moratorium on repayment of the debt for two or three years.

The Supreme Court yesterday granted a stay to six companies in the Liam Carroll-controlled Zoe building group, which has borrowings of €1.1bn.

Chief Justice John Murray, Mr Justice Niall Fennelly and Mr Justice Nicholas Kearns placed a temporary stay on the High Court’s refusal after finding the companies had arguable grounds of appeal. The stay continues pending the full appeal, which is due to be heard next Tuesday.

The Chief Justice said the stay was being granted because there is a constitutional right of appeal. He said that the normal situation is a stay is granted where an appeal is brought promptly.

Chief Justice Murray also told Michael Cush SC, for the companies, their appeal submissions should address the High Court’s views about the adequacy of the report of an independent accountant that backs up the company’s claim it has a reasonable prospect of survival.

ACC Bank, whose demand for repayment of €136 million loans led to the application for protection, opposed the stay.

Mr Cush also argued High Court judge Mr Justice Kelly had gone beyond the evidence in substituting his own views on the property market for December 2008 valuations provided by two estate agents.

Mr Cush further claimed the High Court “misunderstood” the basis of the turn around anticipated for the companies. The High Court had taken as a starting point the anticipated deficit of €1.1bn on a winding up basis when it queried how the companies could achieve a €300m surplus within three years.

The correct starting point was the current deficit of some €260m and, based on that, the companies believed they could achieve the stated surplus.