The Gas Works apartment complex in South Dublin, which was built by developer Liam Carroll.

The Supreme Court on Tuesday upheld the ruling of the Commercial Court that six Zoe group companies, owned by developer Liam Carroll, should not get court protection through the examinership process, as the one page summary scenario of valuations and forecasts based on the Irish property market recovering  in three years, simply wasn't credible. The Court said it was striking that the lending banks appeared to be unwilling to commit to further lending.

Six companies in the Zoe  group, owe eight banks €1.2 billion and because the planned Irish State "bad bank" NAMA (National Assets Management Agency), will not be operational until later this year, Carroll's group is facing impending collapse.

Court judgment

Lyndon MacCann SC, representing Dutch-owned ACCBank, which took legal action against the Zoe companies over an unpaid debt of €136 million, said it was “baffling” that the companies had failed to demonstrate any evidence of a possible upturn in the property market on which their survival plan depended.

The other seven banks could pay the ACCBank loan to buy time until the rescue by NAMA, but all the big Irish developers face collapse if an unpaid creditor makes a move in the court.

On Tuesday, the court heard that five banks - - AIB, Bank of Ireland, Bank of Scotland (Ireland), KBC Bank and Ulster Bank - - supported Carroll's survival plan. AIB and Bank of Scotland (Ireland) had helped pay-off 86 per cent of trade creditors.

The Department of Finance is reported to have rejected any suggestion that the Government’s plans for NAMA were affected by the court ruling. “It makes no difference – NAMA will proceed as planned,” said a spokesman for the Minister for Finance.“We’ve always made clear that NAMA will operate in line with EU Commission guidelines, which set out the use of the long-term economic value measurement.”

The EU commission's isn't as clear-cut as implied.

See comment of Prof Karl Whelan of UCD on the issue of "long-term economic value" on the Irish Economy blog and the potential risk for the economy.

The Supreme Court says in its judgment: "It is rather striking that there is not to be found anywhere in the material or evidence furnished to the Court any commitment by any bank to continue to provide financing in the future for the day to day operations of the companies. Nor is there to be found any explicit statement from the companies that they have been given such a commitment."