The Supreme Court has dismissed an appeal by Vantive Holdings and five related companies seeking the appointment of an examiner, finding they had not provided sufficient objective evidence that the businesses could survive as going concerns.
The judgment, delivered by Chief Justice Murray on 11 August 2009, upheld a High Court decision refusing the application and dismissing the petition. The appeal concerned the threshold question of whether there was a reasonable prospect of survival. The Supreme Court did not need to decide the High Court’s separate view that it would refuse an examiner as a matter of discretion even if that threshold were met.
The companies are part of the Zoe Group, a wider group of development and investment businesses. The petition said the group was insolvent after the property market collapse and that its plan depended on an orderly sale of assets over about 30 months, together with continued support from its banks. Several banks had provided funds to pay most unsecured creditors and agreed to roll up interest, but the judgment said the evidence did not establish a commitment to finance the companies’ future day-to-day operations.
The Court focused on the asset disposal plan. It said the companies had not provided objective material showing that property market conditions were likely to improve enough to allow key assets to be sold in an orderly way and support survival. The plan relied on valuations from December 2008 that were not put in evidence. The accountant’s report did not assess whether the projections or assumptions behind those valuations were reasonable, the judgment said.
The Court also noted that the banks’ support for an examiner did not, by itself, establish a reasonable prospect of survival. Their support might have reflected other benefits, such as a more orderly disposal of assets. The Court said that would not satisfy the statutory test.
The Supreme Court concluded that the companies had not shown their proposed asset strategy was credible or reasonably viable. It dismissed the appeal and upheld the High Court’s refusal to appoint an examiner. The ruling addressed the evidence presented at the examinership application stage; it did not appoint an examiner or determine any later insolvency process.