Working in the media glare

30 November 2009

Neil O’Mahony of Eversheds O'Donnell Sweeney talks to Larry Ryan about his work on the high-profile Zoe group examinership petitions and the changing attitudes to applications for court protection

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Neil O’Mahony has never known busier times. A solicitor, O’Mahony specialises in corporate insolvency and restructuring, advising on liquidations, receiverships and examinerships.

Last week, he was involved in the Belgard Motor Group liquidation, this week he’s working on the EP Mooney insolvency.

But one recent case overshadowed much of his recent work – at least in the eyes of the media. O’Mahony worked on both examinership petitions for Liam Carroll’s Zoe group – petitions ultimately turned down by first Mr Justice Peter Kelly and then Mr Justice Frank Clarke.

With many observers linking the destiny of the Irish property market to the outcome of the Zoe case, O’Mahony admits he felt the media glare.

“In relation to any type of examinership, there is a lot at stake, especially when you have companies that have been built up by individuals over time.

“In this particular case, it was all the more intense by virtue of the fact that it was very much in the public eye and people seemed to identify with the case as a sort of sign of the times.

“Everyone working on it was very much aware of that and there was a lot riding on it.”

Media interest had reached unprecedented levels by the time Justice Clark’s verdict arrived on the second petition.

“There was a lot of media present, standing outside court even at ten o’clock at night. It was pretty different from that perspective and I don’t think many people in the insolvency community would have experienced anything like that.”

Neither judge was convinced by the survival projections made in Zoe’s Independent Accountant’s Reports – continuing a trend in the High Court this year which seems to have seen IARs come under increased scrutiny.

O’Mahony comments: “I think there has definitely been a change in the court’s attitudes in terms of how judges consider the IAR. They are becoming more analytical and forensic, I think, than they have been in the past.

“This case, in particular, got an extremely high level of scrutiny and perhaps more so than has happened before or since. The courts really drilled down into the figures. It will be interesting to see how the Supreme Court deals with ACC’s appeal in the Tivway case.”

Some insolvency practitioners have suggested that examinership isn’t appropriate for developers, where cashflow has dried up and the outlook for turnaround is longer-term than with other businesses.

“There’s always that argument that something needs to be overhauled with the legislation and I wouldn’t necessarily disagree. The legislation was brought in during the nineties and times change. And it’s not necessarily ideally suited to property companies that might need a bit longer, given the climate, to turn themselves around. But that’s not to say that what’s there isn’t sufficient to give the necessary lifeline to property companies. Accountancy practitioners of late have been coming up with more novel types of schemes.

“Examinership is the only piece of rescue legislation that we have. There are mechanisms there to give a lifeline to companies. The expressed standard is a reasonable prospect of survival and I would be very much in favour of abiding by that standard. The IAR should maybe give an idea of the path to solvency for the troubled company.”

So what is O’Mahony’s wishlist for a successful examinership?

“Bank support is essential of course. And preparation is important. You don’t want clients coming to you three days beforehand saying a receiver has been appointed, let’s work the magic here. Every practitioner will tell you that.”

O’Mahony doesn’t see the current spate of insolvencies abating for a while yet and is adopting a wait-and-see attitude to NAMA, the government’s big play to save the banks and the property market.

“The litmus test will be when the banks have this assistance, whether they will be willing to lend to the SME market and whether finance will start to flow. It’s only then that you’ll be able to make a judgment on NAMA.”