The Supreme Court has dismissed the appeal by six companies controlled by Liam Carroll against the Commercial Court's decision not to appoint an examiner.
The companies sought court protection because ACC Bank has started winding up proceedings to recoup loans worth €136m that it had given to the companies.
The court said it was refusing the appeal, because it had concluded that the companies had not established that their strategy for a future orderly disposal of the key assets of the company is credible or reasonably viable.
It said the moratorium on the repayment of interest and capital by most of the companies' banks is a valuable and very positive step for a company which is insolvent and which is endeavouring to trade out of difficulty.
But it said it was not satisfied that the companies had shown the commitment by the banks to future financing.
It described as ‘striking’ the fact that there was no evidence or material furnished to the court giving any commitment by any bank to continue to provide finance for the future day-to-day operations.
Nor is there any explicit statement from the companies, it said, that they have been given such a statement.
The court describes as ‘remarkable’ that if a commitment had been given, it was not stated.
The court also said it cannot be without some significance that none of the banks have spoken in support of the proposition that there is a reasonable prospect of survival.
The Construction Industry Federation said it noted the Supreme Court decision and said it needed to take some time to consider in full the implications of the ruling.
A spokesman for the Department of Finance said that the decision will have no impact on NAMA and it will proceed as planned.
Earlier, Lyndon McCann SC, who was acting on behalf of ACC Bank, said his clients had previously taken a guarded neutral position on the examinership application, pending the publication of the draft legislation on NAMA.
But he said that legislation has now been published, and while it may be amended before the Dáil, his clients considered that what was contained in it could be prejudicial to their position, and so they were now opposing the examinership application.
He said the fact that there was a large level of support from the banks for the application did not mean the companies had a reasonable prospect of survival.
He said the banks concerned may have a number of reasons not to put the companies into liquidation, including that it may result in a more orderly realisation of assets than liquidation would. But he said this was not a justifiable reason under legislation to appoint an examiner.
He said the argument that the banks had put forward finance to pay off unsecured creditors was not relevant to these proceedings, as the bulk of the unsecured creditors were creditors of companies in the wider Zoe Group, not the six companies party to the application.
Mr McCann also said there was no substantiation to the claims by the companies that the banks had agreed in principle to fund their ongoing developments. He also claimed the independent accountant had no independent evidence before him to substantiate claims in the companies' application that the property market would lift in the next three years.
He said the valuations contained in the companies' business plan were not being put before the court to be tested and the independent accountant hadn't bothered talking to any valuers himself.
He said if there was evidence suggesting an upturn in the property market, it was baffling that it hadn't been put before the court. Mr McCann also said his clients were concerned that their security over the companies' assets could be diluted if the companies drew down further borrowings from other banks during an examinership period.
