ACCOUNTANCY FIRM KPMG has rejected concerns about the management capacity of the Zoe group and has also dismissed claims of “critical deficiencies” in the survival proposals for the group and other companies of Liam Carroll, which predicts net assets of some €19 million by July 2011.
David Wilkinson of KPMG, who prepared the three-year business plan and is the author of an independent accountant’s report grounding the group’s protection application, rejected a series of criticisms of both documents set out by insolvency practitioner Simon Coyle in a report for ACC Bank.
On Mr Coyle’s questioning of management capacity at the group, Mr Wilkinson said he had observed confidence in the group’s senior management among its secured lenders.
Mr Carroll’s illness is only recent and, in those circumstances, it was hardly reasonable to speculate he would not be able to fulfil his role, he said.
Mr Wilkinson also denied Mr Coyle’s observation it was “remarkable” the business plan for Zoe, Dunloe Ewart and Orthanc had not been formally updated since December 2008.
The plan was for the three years to the end of 2011; less than one year had elapsed and management was reporting progress under it, including sales and lettings of residential and commercial units.
Management does consider changes in the marketplace in executing the plan and it would be appropriate, during any examinership, to update the plan, he said.
The fact the group had opted for more residential lettings rather than sales was “not a negative factor”.
Contrary to an assertion by Mr Coyle, some banks had agreed to provide funding to complete developments, including at Beckett House, Cherrywood and, subject to planning permission, at North Wall Quay, he said.
Other lenders had confirmed they would consider funding further development proposals put to them. It was also “not critical” to the plan if all of the developments took place.
Mr Wilkinson denied that any examinership of the companies was ultimately for the benefit of shareholders and all risks rested with the creditors.
During 2009, the shareholders had provided personal guarantees enabling the group draw down further bank funding to pay unsecured creditors, he said. The court heard Mr Carroll provided a personal guarantee for some €34 million.
On Mr Coyle’s suggestion that the companies’ business model was predicated on capital appreciation of property assets, Mr Wilkinson said this was not a key element of the companies’ business model and it was not assumed capital values would increase over the next two years.
He said the projected financial position for the group was based on there being no improvement or recovery in the values of commercial investment properties, residential properties, projects under development or landbanks over the next two years.
Under that scenario, the group was solvent “on a balance sheet basis” at July 31st, 2011 as it had net assets then of €19.1 million, he said.
