Round-Up: Two More Liam Carroll Groups Close To Collapse Leaving Banks With Exposure Of Up To €2.8 Billion; Receiver Appointed To Cork Development Company And Assets Seized By Bank; Irish Nationwide Building Society Owed €170 Million By Company Behind Kilternan Development; Collapse In Hospital Sector Claims Another Victim; Beacon Medical Group Reaches Agreement With Creditors Owed Almost €10 Million; Freedom Finance To Hold Creditors’ Meeting Next Week.
PROPERTY
Liam Carroll
Two more property groups owned by Liam Carroll were reported to be close to collapse at the weekend, leaving banks with a total exposure to his companies of up to €2.8 billion. Orthanc and Dunloe, with combined debts of between €1.3billion and €1.5 billion, are under mounting pressure following the decision of the High Court not to appoint an examiner to six companies in Carroll’s Zoe Group. These companies owe banks €1.3 billion.
If the Zoe decision is not overturned by the Supreme Court on Tuesday (tomorrow), up to half a dozen banks will prepare to appoint receivers to seize assets belonging to Orthanc and Dunloe, the Sunday Business Post revealed in a story headed “Carroll Group Owes Banks Almost €2.8m”. Zoe, Orthanc and Dunloe are the three main entities in Carroll’s maze of companies. However, Orthanc and Dunloe were both outside the examinership application and details of their financial situation have remained hidden.
The two groups which control much of Carroll’s property empire owe money to AIB, Bank of Scotland (Ireland), Ulster Bank, Bank of Ireland and EBS Building Society. AIB is owed close to €500 million by Orthanc and Dunloe, leaving it with a total exposure to Carroll of about €1 billion. Bank of Scotland (Ireland) has an exposure of €500 million between the three groups.
Negotiations with the banks were continuing at the weekend in an attempt to save the businesses following the High Court decision. Bank of Scotland (Ireland) and AIB are in talks with ACC Bank about buying out the €136 million that ACC is owed by Carroll. It was ACC, the Dutch-owned lender that has taken an increasingly aggressive approach to its Irish property loan book, which triggered Carroll’s application for an examiner by threatening to wind up companies that owe it money.
In a feature article, the Business Post said the decision of the High Court not to appoint an examiner to the Carroll companies was a body blow to the National Asset Management Agency (NAMA). This is exactly the sort of scenario the agency was set up to avoid. If Carroll fails in another attempt to have an examiner appointed in the Supreme Court, a receiver would be given the task of selling his assets. A quick sale of these properties could drive down the market price of property even further, setting a new floor for land banks and uncompleted developments. This, in turn, would affect the price NAMA would or should pay for property loans based on the new lower value of the security that underpins these loans.
Other effects of a fire sale could be a flood of property onto the market, depressing prices for a long time to come, and it could set a new floor for the price of apartments in Dublin. The Sunday Times said that AIB’s exposure to Carroll prompted it to assemble a team of executives to manage his debts ahead of the establishment of NAMA and the Sunday Tribune revealed that Carroll had launched six legal challenges to the Companies Act so far this year as he battled to keep his property empire afloat.
Kinsale Harbour Resort Development
ACC Bank has seized the assets of Kinsale Harbour Resort Development, the company behind a planned 650-acre development in west Cork. It has installed Barry Donovan, a partner with KPMG in Cork, as receiver to recover loans it had advanced to the company. “ACC Bank Seizes Assets Of €200m Kinsale Development Firm” was the Sunday Business Post headline on a story that said ACC Bank holds the first charge on all lands owned by the company in Kinsale. In 2007, Resort Development had bank loans for €3.21 million falling due within a year.
The firm’s €200 million luxury resort plan for Kinsale Harbour was spear-headed by businessman Sean Rainey and was to be backed by a consortium of local investors. It was to include a Hyatt hotel, an equestrian centre and a championship golf course. However, the development was delayed when an objector, Thomas Harding, challenged it in the High Court and the Supreme Court. In a ruling last year, the Supreme Court prevented Harding from bringing a judicial review case aimed at overturning planning permission for the project.
HOSPITALITY
Kilternan Hotel And Country Club
The Irish Nationwide Building Society is owed €170 million by the company behind the redevelopment of the Kilternan Hotel and Country Club in south Dublin, according to confidential High Court pleadings revealed by the Sunday Business Post. The company, owned by publican and hotelier Hugh O’Regan, is seeking bankruptcy protection from its creditors after running out of cash. The building society is the lead banker behind the Kilternan project, which has stalled in recent months. O’Regan has asked the High Court to appoint an examiner to three of his companies, including Dashavan which is behind the hotel and country club development.
“O’Regan Firm Owes Nationwide €170m” the newspaper proclaimed in a story which said that Anglo Irish Bank had also advanced €23 million to two other O’Regan companies that are seeking the protection of the courts. In total Anglo has lent about €80 million to companies connected to O’Regan. At a special meeting of the High Court last week, KPMG partner Kieran Wallace was installed as interim examiner to three of O’Regan’s companies – Dashavan, Clubco and Thomas Read Holdings. A full hearing this week will determine whether Wallace will be appointed official examiner, which would allow 100 days to prepare a rescue package for the business.
O’Regan applied to the court for an examiner when Anglo moved to appoint a receiver to certain assets controlled by the three companies. The receiver, accountant Martin Ferris, has stood aside pending the outcome of the examinership petition. However, Irish Nationwide and Anglo have said they intend to oppose the examinership. Anglo told the court that the companies do not fulfil the criteria for the appointment of an examiner. Irish Nationwide has taken a similar view, arguing that the companies do not employ anyone and have no income.
Asia de Bruin
The collapse in the hospitality sector has claimed another victim with the appointment of a liquidator to Asia de Brun, an Asian-themed restaurant chain, which has an outlet in Citywest and two in Kildare. The company has debts of more than €1.1 million, according to a statement of affairs circulated to creditors. “Liquidator Is Appointed To Restaurant Chain” the Business Post reported. The liquidator, George Maloney, of Baker Tilly Ryan Glennon, was appointed at a creditors’ meeting last week. Maloney is in talks with a number of parties who are interested in acquiring the company’s business and assets.
The three Asia de Brun outlets formerly traded under the Lemongrass restaurant franchise, but were rebranded some months ago. The Lemongrass franchise, controlled by entrepreneur Emmet Memery, went into liquidation earlier this year. Asia de Brun is controlled by businessman Niall Browne, who established Lemongrass in Naas, Co Kildare. Its most recent accounts showed retained losses of €374,000 at the end of 1974 when creditors were owed more than €1.1 million.
HOSPITALS
Beacon Medical Group
The Beacon Medical Group (BMG) has reached agreement with a group of creditors, who are owed under €10 million, to pay them 20 cent on the euro up front with the remainder to be paid over time. The creditors include architects, engineers and other consultants who helped BMG to develop three co-located hospitals in Cork, Limerick and Dublin. The creditors were told they will receive full and final payment before construction begins on the hospitals.
It is not clear when that will be – the hospitals require €1 billion to fund their construction and raising the money is proving difficult. In a story headed “BMG Creditors Agree Deal On Hospital Fees”, the Sunday Times said BMG was also in talks with the University of Pittsburgh Medical Centre (UPMC) with a view to selling it a larger stake in its business. The talks are expected to result in the American hospital giant taking a 66pc stake in Beacon’s existing hospital in Sandyford, south Dublin and 40 pc in its co-location projects. BMG and UPMC are continuing talks with their bankers over renegotiating debts of €130 million. Sources close to the talks told the newspaper that there was no prospect of the bank having to write off or freeze interest payments on the loan.
MORTGAGES
Freedom Finance
The broker, Perfect Mortgages, which traded as Freedom Finance, and specialised in offering subprime mortgages to people with poor borrowing histories, is to hold a creditors meeting next week. Under the heading “Sub Prime Broker To Hold Creditors Meeting”, the Irish Times reported that the meeting is “for the purposes mentioned in sections 267 and 268 of the Companies Act”. This usually refers to the appointment of a liquidator to wind up a company. The creditors meeting will take place at the Hotel Kilkenny, College Road, Kilkenny, on August 12.
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