Beleaguered Carroll in one final throw of the dice

JUST when Liam Carroll’s week looked like it couldn’t get any worse, media reports yesterday suggested that one of the country’s biggest property developers had been admitted to a psychiatric hospital in Dublin on Thursday night.

It comes after rumours about Carroll’s ill health have gathered apace over the past number of months. Certainly, a rare photograph of the publicity-shy millionaire taken outside his modest suburban home on Sycamore Road, Mount Merrion, Dublin, last week clearly portrayed a man under great stress.

Details about Carroll’s poor health emerged the day before his Zoe group was granted leave of the High Court to present a new petition next week seeking the appointment of an examiner to the troubled business empire built up over the past two decades by the reclusive businessman.

The Supreme Court had rejected on Wednesday an appeal by Carroll to obtain the “breathing space” of examinership for six of his companies, which would have protected them from ACC Bank and its threats of insolvency proceedings over their failure to repay loans totalling €136m.

A survival plan drafted by Carroll’s Zoe Developments group was criticised on Tuesday for its vagueness, with projections that it could turn around its fortunes and earn a profit of €300m in three years described as “fanciful”. “The valuations in question are out of date and can hardly be described as truly independent,” said Mr Justice Peter Kelly in the High Court.

However, last night, counsel for Carroll said the court’s concerns had been dealt with as letters from the banks in relation to finance and affidavits of valuations carried out by Hooke and McDonald and CRBE were now before the court.

Following last Tuesday’s judgment, ACC wasted no time in returning to the High Court to have a liquidator appointed to two of Carroll’s firms. Given that all the companies in Zoe are highly interdependent, such a development brings the group one step closer to total collapse. At present, Zoe’s liabilities outnumber its assets to the tune of over €265m, although it is also estimated that the group’s indebtedness could rise to over €1.1 billion. Take in Carroll’s other two main business vehicles, Dunloe Ewart and Orthanc and the developer is in the red to €2.2 billion.

This week’s events are just the latest chapter in what has been a miserable 2009 for Carroll. Already this summer, Irish Nationwide hit Aifca — a firm involved in a redevelopment at The Square in Tallaght — with a judgment for €78m over unpaid loans, while he has also been forced to close two relatively new hotels in the same area.

Carroll, nicknamed the “Shoebox King” — an unsympathetic reference to the hundreds of poorly designed, small apartments constructed by Zoe in Dublin in the early 1990s — is also facing legal action from Dun Laoghaire-Rathdown County Council to protect €57m which the local authority invested in a joint development with one of his companies at Cherrywood in south Dublin.

His investments in major public companies like Aer Lingus, Greencore and Irish Continental Group are all carrying large losses at current values, while two key developments in the Dublin Docklands, on which he has pinned hopes of a revival, might even be mothballed.

Seven out of the eight banks owed around €1.2 billion by Zoe had until this week offered Carroll a major lifeline by giving him a two-year moratorium on interest payments from last December. Two of his biggest creditors, AIB and Bank of Scotland even advanced him new loans to pay off trade creditors.

However, it is doubtful if such support will continue for much longer as the banks met to review their position on Wednesday. As one insolvency expert remarked: “All bets are off after the court’s ruling.”

The prospect of the wheels coming off Carroll’s bandwagon also poses a major difficulty for the National Asset Management Agency (NAMA) in the event of any fire sale of Zoe’s landbanks. It has become increasingly clear that the discount, estimated generally at 30%-40%, which NAMA proposes to offer banks to take toxic development loans off their books is significantly more than the current market value of such property.

In what is a last throw of the dice, Carroll’s lawyers are preparing a new petition to be heard next week. Legal experts claim it may have little chance of success.