THE news that the group of companies owned by Liam Carroll, the Zoe Developments group, were insolvent should hardly have been a surprise.
The property market has collapsed. The millionaire moguls spawned by the boom have found themselves teetering on a financial precipice.
On Friday, they were pushed even further over the edge when one of the giants of their game over the past 20 years asked the High Court to protect his companies from banks looking for their money back.
Mr Carroll asked for court protection for companies in his Zoe Group on Friday after ACC Bank threatened to wind up six companies in pursuit of debts of €131m. His lawyers want an examiner to be appointed to help the companies survive and prevent an attack on the dozens of companies that make up the group.
During the course of the hearing, it emerged that companies within Mr Carroll's group owe a spectacular €1.2bn to an array of banks. The group is also insolvent and the court heard that, were the group to be liquidated, there would be losses of €900m.
AIB is owed €489m; Bank of Scotland (Ireland) is owed €321m; Bank of Ireland is owed €113m; Ulster Bank is owed €82m; Anglo Irish Bank is owed €38m; KBC Bank Ireland is owed €23m and EBS building society is owed €8.5m.
Counted out like this, the level of debt has staggered even seasoned economists and bankers. The Zoe companies' debt to banks constitutes one-fifth of the €5.3bn public- sector cuts recommended by An Bord Snip Nua.
Jim Power, chief economist with Friends First, admitted yesterday to being flabbergasted by the figures.
"How one property group could have been allowed to build up debts of €1.2bn is absolutely extraordinary. It just goes to prove that this whole economic miracle was built on sand. There is no way I would have realised the extent of what was going on," he said.
Liam Carroll is not the first developer to be pursued by banks -- Paddy Kelly has also been chased by ACC Bank for lesser sums. But Mr Carroll is certainly one of the biggest, most modest and least prone to extravagance. And if the examinership proceeds, it will be the biggest rescue effort in corporate history.
The enigmatic 58-year-old is the son of a bookie from Dundalk, Co Louth. He began life as a mechanical engineer and worked for Jacobs International. He reportedly discovered a knack for the property game in his thirties, and set up Zoe Developments. The company was famous for tiny shoe-box apartments, thrown up in a frenzy of city centre apartment building during the 1990s. He moved on to grander commercial developments, turning corporate raider.
The first raid was on Dunloe Ewart in 2002, a property company, from his rival, Noel Smyth, the developer cum solicitor who represented Charles Haughey at a corruption inquiry. He went on to build up stakes in Aer Lingus, Irish Continental Group and Greencore, all of which have now cost him dear.
He has inexpensive tastes. He lived for years in a semi-detached house in Mount Merrion. When we called there last month, we were told the family had moved on and the house was rented to tenants -- a sensible piece of good housekeeping.
Those who know Mr Carroll say the modesty in his personal life belies his ruthless business style. He is known to shun small talk and other niceties commonly relied on to smooth the path to a good business deal. In fact, he doesn't talk in public at all. He has never given an interview.
Mr Carroll's difficulties have been brewing for a while.
Several investments have been haemorrhaging money of late. The developer reportedly lost €58m alone on his investment in the Irish Continental Group.
But Mr Carroll remains a wealthy man. In another High Court action last month, it emerged that he and his wife, Roisin, had assets of €259.5m and debts of €149m to banks.
Past collisions with old rivals have also come back to haunt him.
Just a couple of weeks ago, Noel Smyth, his old rival, began a court action suing Mr Carroll and two other businessmen for €140m alleging that they sabotaged his plans to develop The Square Shopping Centre in Tallaght, claims which Mr Carroll has denied.
The source of his current financial difficulties is the aggressive pursuit of outstanding debts by two banks, Irish Nationwide and ACC Bank.
Irish Nationwide is suing Mr Carroll personally for €60m in relation to the same deal. And on Friday morning, Irish Nationwide won a €78m judgment order against Aifca, another company controlled by Mr Carroll, over unpaid loans relating to The Square deal.
Soon after the building society secured that judgement on Friday, Bill Shipsey, Liam Carroll's barrister, asked the High Court for protection for companies within the Zoe Group.
The Court heard that last month, ACC Bank had given the companies 21 days to repay loans of €1.2bn. The deadline was tomorrow.
Mr Shipsey told the court that the companies need a moratorium on their debts as ACC was threatening the group with liquidation or receivership. He said the companies needed the protection of the court to stop the attack by ACC Bank.
He said they would seek to appoint an examiner to devise a scheme to ensure the group's survival later this month.
The future for the affected companies rests not only on the outcome of that examinership but on the financial health of Mr Carroll's other businesses, including Dunloe Ewart.
The question now is whether the actions by Irish Nationwide and ACC Bank will start a stampede to the courts, with banks rushing to be first to secure judgements against the developers who owe them billions.
Or will they wait for the National Asset Management Agency? The agency is still in an embryonic stage but when it is set, will use taxpayers' money to take between €80bn and €90bn in bad loans off the banks. The State will buy the debt at a discount but the cost will run to billions.
Up to now, the main banks that have signed up to the State's guarantee scheme have been playing ball; rather than chase developers down for debts they have working with them, stalling on calling in the loans until the Nama, their great white hope, rides in and takes the bad debts and assets off them.
Would it make any difference to Nama if the companies Mr Carroll is trying to save went under? Jim Power, chief economist with Friends First, said it was difficult to tell. "I would strongly suspect that the Government, given its control over AIB and the domestic banks, will try and use its influence to prevent them doing what ACC are doing. ACC is outside of the Irish government's remit because they are owned by Rabobank," he said.
"This does complicate the Nama issue in that if ACC Bank has started a trend and the other banks follow suit, it is going to make Nama's operations seriously murky. I still think, ultimately, that ACC was correct. In the slightly longer term it actually improves Nama's prospects but in the short term it creates uncertainties."
The more immediate and more difficult fall-out is on those struggling to survive in the already decimated construction sector, for those who would lose their jobs but also for smaller creditors -- such as traders and contractors. The effect of Friday's action protects the Carroll companies from creditors chasing debts and only when the examiner has completed his work -- which will take about 90 days -- will they know whether will get anything or not.
Jerry Beades, a building contractor who has had to let some of his own staff go in the downturn, said the sector is littered with "small guys" who face going to the wall because they cannot get paid. "This will bring the crisis to a new place. It will send shockwaves throughout the industry," he said.
Jim Power believes the difficulties facing developers such as Liam Carroll were always going to surface. "I do think that it was going to happen anyway. This is just bringing it forward. I have believed for a long time that developers like Carroll would have serious difficulties trading their way out of this crisis."