Carroll judgment threatens property market
The court refusal to give Mr Carroll breathing space from his creditors has left Mr Carroll’s business empire on the brink of collapse.
But a fire sale to recover the €136 million owed to ACC, the bank which brought the legal action, would seriously impact on the size of the discount which the Government’s ‘bad bank’ would offer to financial institutions to remove bad debts from their balance sheets as it would set a benchmark for the level of discount considered fair value by taxpayers.
As a general guideline, NAMA has offered to pay banks the “long-term economic value” of properties, a figure which is likely to be considerably higher than the current market value of most sites.
However, a spokesman for Finance Minister Brian Lenihan last night insisted the decision would have no impact on NAMA, which will proceed as planned.
Also left in a poor position are the other banks to which Mr Carroll owes money, a total of more than €2bn.
AIB, for example, is owed more than €500m from the six companies listed in the ACC action alone. Overall it is owed €1.1bn.
Mr Carroll had sought protection from the courts because ACC Bank threatened to take insolvency proceedings against the companies to recoup loans worth €136m.
But the Supreme Court upheld last month’s refusal by the Commercial Court to appoint an examiner to the six firms which are part of Mr Carroll’s Zoe Developments group.
Yesterday’s ruling also paves the way for ACC and possibly other lenders to apply to the courts to have one or more of Mr Carroll’s companies compulsorily wound up for failing to make loan repayments.
Last night, the Construction Industry Federation said it would need time to consider the full implications of the ruling for the sector. There are growing fears within the industry that the ruling could see a similar move by foreign-owned banks, like ACC through its Dutch parent Rabobank, against other major property developers.