Supreme Court ruling likely to decide fate of Zoe group
Lawyers for ACC Bank, which is owed €136m by several Zoe companies, yesterday took a Supreme Court challenge against a decision by the High Court in August to allow the group file an unprecedented second application for examinership. It came after a similar petition had been rejected by both the High Court and Supreme Court earlier this summer.
However, the current appeal by the Dutch-owned bank represents just the first of several possible obstacles which Mr Carroll will have to overcome in a series of Supreme Court hearings over the next few weeks if he is to save his vast business empire which owes in excess of €1.3 billion to various banks.
If successful next week, the developer will then move on to appeal a separate High Court ruling which rejected Zoe’s actual second application for examinership as well as another separate challenge against a subsequent High Court decision to wind up two key companies in the group.
ACC Bank argued yesterday that the decision by High Court judge, Mr Justice John Cooke, to allow Zoe to bring a second application for examinership was wrong as it represented an abuse of process. Lyndon MacCann SC for ACC, said Zoe should not be allowed “a second bite at the cherry” as it had deliberately withheld information from both the High Court and Supreme Court during its unsuccessful first application for examinership. It was a tactical decision that had backfired on Zoe, remarked Mr MacCann. He said a second application was “unprecedented in the history of corporate litigation,” although he conceded that the Companies Act did not expressly prohibit such a petition.
However, he claimed that the intention of the legislation was not to permit companies to seek a series of rolling applications in order to obtain protection from creditors.
But Michael Cush SC for Zoe said the overriding purpose of the legislation was to protect creditors and jobs. He pointed out that banks representing 76% of the total loans owed by Zoe as well as employees, sub-contractors and trade union, SIPTU, had supported the group’s application for examinership.
Mr Cush cited statements from a range of businesses highly dependent on Zoe for their own commercial survival. The Supreme Court heard that many had already made large numbers of their staff redundant, while remaining employees had taken pay cuts in the range 5%-25%.
“These are real jobs. These are real people with an interest in the Zoe group continuing,” observed Mr Cush.
He acknowledged that Mr Carroll had ignored the advice of his lawyers and his fellow Zoe directors in his decision not to allow a rescue plan for the group to be disclosed to the Supreme Court during the first unsuccessful application for examinership.
However, he stressed there had been no attempt to mislead the court or to act in bad faith by not making such commercially sensitive information available. He reminded the three Supreme Court judges – Chief Justice, Mr Justice John Murray, Ms Justice Susan Denham and Mr Justice Nial Fennelly – that Mr Carroll had been hospitalised shortly after that ruling.
Zoe’s financial director John Pope stated in an affidavit that he believed Mr Carroll’s ill health had effected his decision-making. Mr Pope said he had underestimated the developer’s medical position and the level of personal stress he was under at the time.
However, the Chief Justice remarked that Mr Pope’s comments were “an opinion, not evidence”. He claimed any evidence about Mr Carroll’s mental condition at the time was “scant indeed”.
The Chief Justice remarked that the Supreme Court had a duty to protect the sound administration of justice. He said the Supreme Court will issue its ruling on ACC’s appeal on Tuesday.
If the Court upholds Mr Justice Cooke’s original ruling, it will hear Zoe’s appeal against the High Court’s refusal of its second application for examinership on October 12.
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