Re Vantive Holdings and Others

• Jurisdiction: Ireland
• Judge: Mr. Justice Clarke
• Judgment Date: 11 September 2009
• Neutral Citation: [2009] IEHC 409
• Court: High Court
• Date: 11 September 2009

[2009] IEHC 409

THE HIGH COURT

No. 450 COS/2009

Vantive Holdings & Ors, In Re

[2009] IEHC 409

IN THE MATTER OF VANTIVE HOLDINGS

AND IN THE MATTER OF VILLEER DEVELOPMENTS

AND IN THE MATTER OF PEYTOR DEVELOPMENTS

AND IN THE MATTER OF CARRAGH ENTERPRISES LIMITED

AND IN THE MATTER OF PARLEZ INTERNATIONAL LIMITED

AND IN THE MATTER OF MORSTON INVESTMENTS LIMITED

AND IN THE MATTER OF ROYCETON

AND IN THE MATTER OF THE COMPANIES ACTS 1963 TO 2009

VANTIVE HOLDINGS & ORS, IN RE UNREP KELLY 31.7.2009 2009 IEHC 384

VANTIVE HOLDINGS & ORS, IN RE UNREP SUPREME 11.8.2009 2009 IESC 68

VANTIVE HOLDINGS & ORS, IN RE UNREP COOKE 24.8.2009 2009 IEHC 408

COMPANIES ACT 1963 S214

COMPANIES (AMDT) ACT 1990 S2(2)

COMPANIES (AMDT) ACT 1990 S3B(G)

GALLIUM LTD (T/A FIRST EQUITY GROUP), IN RE 2009 2 ILRM 11 2009 IESC 8

TRAFFIC GROUP LTD, IN RE 2008 3 IR 253 2008 2 ILRM 1 2007/58/12501 2007 IEHC 445

COMPANIES (AMDT) ACT 1990 S4

COMPANIES (AMDT) ACT 1990 S3(3B)

COMPANIES (AMDT) ACT 1990 S3

PHILP v RYAN & BON SECOURS HOSPITAL & ANOR 2004 4 IR 241 2004/42/9677 2004 IESC 105

SHARMANE LTD, IN RE UNREP FINLAY-GEOGHEGAN 30.7.2009 2009 IEHC 377

COMPANY LAW

Examinership

Second petition - First petition rejected - Changes since original application - Whether group as whole had reasonable prospect of survival as going concern - Objective appraisal of evidence - Revised business plan - Difference of expert opinion - Applicable legal principles - Relevant factors to take into account - Discretionary factors - Prejudice to interests of creditors - Interests of employees - Implications of liquidation - Whether petitioner discharged onus of proof - Timescale by reference to which survival of company to be considered - Approach court should take in relation to separate companies - Definition of term undertaking - Group as whole - Whether court had jurisdiction to appoint examiner - In re Vantive Holdings [2009] IEHC 384, (Unrep, Kelly J, 31/7/2009); In re Vantive Holdings [2009] IESC 68, (Unrep, SC, 11/8/2009); In re Vantive Holdings [2009] IEHC 408, (Unrep, Cooke J, 24/9/2009) ; Re Gallium Ltd [2009] IESC 8, [2009] 2 ILRM 11; Re Traffic Group Ltd [2007] IEHC 445, [2008] 3 IR 253; Philp v Ryan [2004] IESC 105, [2004] 4 IR 241 and Re Sharmane Ltd [2009] IEHC 377, (Unrep, Finlay-Geoghegan J, 30/7/2009) considered - Companies Act 1963 (No 33), s 214 - Companies (Amendment) (No 2) Act 1999 (No 27), ss 2(2), 3, 3B(g) and 4 - Petition refused (2009/450COS - Clarke J - 11/09/2009) [2009] IEHC 409

In re Vantive Holdings

Facts: A second petition was presented to the High Court to appoint an examiner to the Zoe Group of companies. More detailed evidence was now placed before the Court to evaluate whether the companies had a reasonable prospect of survival as a going concern. Negative decisions on an earlier petition had been delivered by both the High Court and Supreme Court. ACC Bank objected to the jurisdiction of the Court and the High Court had earlier given judgment allowing the second petition to go ahead. The petitioner had been afforded a further opportunity in the interests of fair procedures to comment on certain matters arising out of questions formulated by the Court. The issue arose as to whether the statutory test of a reasonable prospect of survival as a going concern could be met. A revised business plan had been presented to the Court. ACC was critical of the manner in which the business plan addressed the payment of interest by the group and the prospects of the property market.

Held by Clarke J. that the Group as a whole did not have a prospect of survival, nor could the individual companies. The procedural history of the case was not a matter that the Court could take into account. The second petition had been presented very differently to the first petition. The protection of employment and unsecured creditors was an important factor properly to be taken into account in the court's exercise of its discretion. The business plan did not stand up to analysis. The revised business plan did not have as its focus a large scale disposal of the company's assets.

Reporter: E.F.

1. Introduction

2 2 1.1 This is the second petition to appoint an examiner to a number of related companies ("the companies") which form part of what is known as the Zoe Group ("the Zoe Group"). In this second application, the six companies represented in the original application are joined by a seventh related company, Royceton. It will be necessary, in due course, to look briefly at the procedural history of the original examinership application in relation to these companies ("the first petition"). In particular, it will be necessary to look at the reasons why the first petition was rejected, both by this Court (Kelly J.) and by the Supreme Court on appeal. However, in simple terms, the first petition failed because there was insufficient evidence before the court to enable a proper evaluation to be carried out as to the prospects of survival of the companies concerned.

3 3 1.2 There is no doubt but that more detailed evidence is now placed before the court which at least enables the court to approach the task of carrying out an evaluation as to whether the companies, or any of them, have a reasonable prospect of survival as a going concern. However, it is also fair to say that there have been other changes since the original application.

4 4 1.3 It is unnecessary to rehearse in any detail the case which was made on the first petition. Details of that case appear from the judgments delivered both in this Court and the Supreme Court (High Court [2009] IEHC 384; Supreme Court [2009] IESC 68). However, it is clear that significant reliance was placed on the fact that the Zoe Group as a whole had put together a business plan in December 2008, which had at least received a reasonable measure of support from its bankers. That business plan was not, however, placed before the court in evidence on the previous occasion. The business plan concerned was available to me. However, it is fair to say that the business plan itself would, on any view, have needed a significant reappraisal in the light of developments in the economy generally, and in the property sector particularly, since December 2008.

5 5 1.4 On that basis, the broad outline of a possible survival plan contained in the independent accountant's report presented in relation to this petition ("the revised business plan") differs not only in detail but also in its general approach to that contained in the December 2008 business plan. It will be necessary to address those changes in due course.

6 6 1.5 In addition, it should be noted at this stage that initial objection to the presentation of this second petition was taken by ACC Bank plc. ("ACC") (who object to the appointment of an examiner) on the basis of an absence of jurisdiction and allied points. That matter was determined by Cooke J. on 21 ^st August, 2009, on the basis that a full hearing on the merits of this second petition should go ahead. Full written reasons were delivered by Cooke J. on 24 ^th August, 2009, [2009] IEHC 408. The hearing before me was conducted on 1 ^st, 2 ^nd and 7 ^th September, 2009. It is also of some importance to record what occurred yesterday, on 10 ^th September, 2009. It has been my original intention to deliver this judgment on that day. While I was finalising some detailed aspects of that judgment, a number of questions seemed to me to arise in relation to the figures presented on behalf of the petitioners, as set out in the evidence and materials before me. I came to the view that it would, potentially, be in breach of the rules of fair procedure, to have regard to those questions (which had not arisen in the course of the hearing before me) without affording the petitioner an opportunity to comment. On that basis, rather than deliver this judgment, I felt it appropriate to address some additional questions to counsel for the petitioner to enable the petitioner to clarify matters. Where appropriate, in the course of this judgment, I will refer to those additional answers and the issues addressed in the course of dealing with them.

7 7 1.6 It should also be noted that, during the course of the hearing, I raised the issue, alluded to in the judgment of Cooke J., of whether the true petitioner on this application was the company itself or its directors. It was agreed that, whether technically speaking, the proper petitioner was the company or the directors, there was no issue as to the capacity to present the petition or the validity of the petition being heard on its merits. The only issue which might arise would be in respect of costs. Counsel for the provisional liquidator indicated that, irrespective of whether the court refused or granted the application, there was a potential issue as to costs from the provisional liquidator's perspective. In those circumstances, it is not necessary to deal with that issue at this stage. References in this judgment to "the petitioner" should be considered accordingly.

8 8 1.7 In those circumstances, it seems appropriate to turn, first, to the procedural history.

2.1 The first application: 2009/402 COS

The financial difficulties of the Zoe Group, and in particular, the companies, arise from the collapse in the Irish property market. As a result of these difficulties, in December 2008, the Zoe Group's management met with their banks, which are their principal creditors, to address the situation which had arisen and prepared a three-year business plan. With one exception, the relevant banks were supportive of the Zoe Group's business plan and agreed (at least in general terms) to continue to support the companies, in particular by providing (in the case of some of the banks concerned) funds to enable the companies to settle...