The High Court refused to appoint an examiner to six insolvent property companies, dismissed their petition and withdrew the court protection previously afforded to them. Mr Justice Kelly gave judgment on 31 July 2009, finding the companies had not established a reasonable prospect of survival as a going concern.
The companies were Vantive Holdings, Villeer Developments, Peytor Developments, Caragh Enterprises Limited, Parlez International Limited and Morston Investments Limited. The court said estimated winding-up shortfalls across the six exceeded €1 billion. Morston was incorporated in Jersey; the other five were Irish companies.
The petition followed repayment demands issued by ACC Bank on 29 June 2009: €63.96 million to Vantive Holdings and €72.111 million to Morston. The demand to Vantive was made under section 214 of the Companies Act 1963, which gave the company 21 days to pay. The petition was presented shortly before that period expired, and the companies received court protection while the examiner application was considered.
The companies relied on an independent accountant’s report, which said a scheme of arrangement could offer a reasonable prospect of survival. Its projections assumed development of existing sites and an orderly disposal of assets over three years, with the companies moving from debts exceeding €1 billion to projected net assets of €290,436,290. The proposed rescue depended on rescheduling bank debt, compromising inter-group debts and retaining existing management.
Justice Kelly rejected the projections as lacking reality in light of the property market’s collapse. He noted that the property valuations used were seven months old and that only 39 residential units had been sold since the business plan began, despite what the judgment described as an aggressive marketing policy. He also said the accountant had discussed the assumptions with company management but there was no evidence of an independent view or consultation with others.
The judge said he was not satisfied that the companies had met the legal threshold for examinership. He added that, even if they had, he would have been disinclined to appoint an examiner. The banks were the only creditors apart from the Revenue Commissioners, and he considered they could realise the property themselves. He also found that about 100 people were directly employed, rather than the 650 cited in documents, a figure largely made up of subcontractors. The court did not determine the companies’ ultimate insolvency outcomes; it refused the examiner application, dismissed the petition and withdrew its protection.