The High Court will give its decision on Friday afternoon on an application by six companies controlled by property developer Liam Carroll to have an examiner appointed to them.
The Commercial division of the court this morning heard arguments from counsel for Vantive Holdings, Jersey-registered Morston Investments and four other related companies, in support of their receiving the court's ongoing protection.
Senior Counsel Michael Cush said the companies, and the wider Zoe group of which they are a part, had historically been very successful property development businesses.
But he said more recently they had experienced difficulty due to credit problems, the downturn in the property market, and problems with investments.
In particular, he said difficulties arising from the development of a new headquarters for Anglo Irish Bank at North Wall Quay in Dublin had created significant difficulties.
He said Vantive Holdings is now clearly insolvent, as are three other companies related to it. If liquidated, he said, the estimated deficiency of the group as a whole would be over €1 billion.
But Mr Cush said that following the drawing up of a business plan in 2008, seven of the companies' eight banks had supported the continuation of the businesses.
He said this had required huge forbearance from the banks. Part of the plan, he said, had seen AIB and Bank of Scotland Ireland make available additional finance to pay back third party unsecured creditors, which had since been done.
Another feature of the plan saw seven of the banks agree to a moratorium on repayment of the loans and the rolling up of interest. But he said ACCBank, which is owed €136m, or 10% of the six companies' bank debts, had taken a different view, and its intention to have the companies wound up had prompted the application for examinership.
He said that given time, forbearance of the banks (none of which is opposing the examinership application) and the orderly disposal of assets, there has to be a prospect of survival for the companies. He also pointed out that the companies are not envisaging having to write off any of the money they owe the banks, and intend repaying in full.
Mr Cush also read parts of an affidavit from Liam Carroll, in which the businessman outlined details of development sites which the companies hold, which he said would be at the forefront of future development and would regain value quickly when the market improves.
He blamed the paralysis of the apartment market, the overhang of supply, the collapse of share prices, the shortfall in funds to pay creditors and problems with the Anglo Irish Bank headquarters project for his companies' difficulties.
But he expressed the belief that with the support of the banks, the group will be able to trade through its current difficulties. He said the companies are now focused on what they have to do to, including disposing of some of their residential stock and equities, and the development of new sites.
He said that if wound up now, the disposal of assets would lead to a significant reduction of their value, and added that it was unlikely the markets could absorb such a large portfolio in such a short space of time. He also said there would be consequences for companies controlled by Mr Carroll outside the Zoe Group.
The court also heard that the independent accountant appointed to file a report on the companies prior to the application also believed they have a reasonable prospect of survival.
His report detailed how since the new business plan was put in place, the companies had sold 39 residential units, worth €11.7 million.
Judge's concern about information
But Mr Justice Kelly said the actual level of trading seemed to be quite small. He said he had to be concerned with whether it was wise to pour further money into providing offices in an already oversubscribed market that was showing no sign of recovering.
Mr Justice Kelly also said he was very concerned about what he described as a litany of incorrect information given to the court at the first hearing two weeks ago and described the absence of a correction of an inaccurate account of the companies assets and liabilities as an extraordinary omission.
He also questioned how long the independent accountant had been given to prepare his report as part of the application.
The court was also given details of the complicated ownership structure of the six companies and wider group, which the judge described as a 'spider's web'.
Mr Cush told the court that although registered in Jersey, Morston Investments has its only office here, has board meetings here, its directors are Irish and has assets here. That level of connection to Ireland, he said, means it falls under the court's control.
Mr Justice Kelly asked whether the captains who 'navigated the ship onto the rocks' would be remaining in charge if the company went into examinership, which Mr Cush confirmed they would. He also raised questions about the number of employees at the group's firms.
Mr Cush confirmed that while there were fewer than 100 full-time employees, 650 employees if sub-contractors were included. Mr Justice Kelly said one matter he had to take account of was the knock-on effects for employment, but that there was a big difference between 650 and 100 employees.
Summing up, Mr Cush said it was a most unusual application for examinership as it was not being opposed by any creditors, no debts were being written down, and 90% of creditors were co-operating, all of which must satisfy the requirement for there to be a reasonable prospect of survival.
The court also heard from Senior Counsel Rossa Fanning, on behalf of ACCBank, who said his client was maintaining its 'neutral guarded' position.
He said there had been no change in the bank's position, but added that could change depending on developments regarding the Government's planned National Asset Management Agency.
