DEVELOPER Liam Carroll last night lost the battle to protect his multi-billion euro empire, raising fears the property market will be plunged into further turmoil.
The Supreme Court rejected his survival plan -- saying it was neither credible nor viable.
A number of banks are today expected to begin the process of picking over the bones of his companies, with a view to recouping a fraction of their losses.
They will be led this morning by ACC Bank, who may seek to wind up his companies, appoint a liquidator or receivers.
The tycoon's Zoe Group of companies is laden down with bank debts of more than €1.2bn -- and a fire sale of his assets could undermine the Government's NAMA plan to remove €90bn of toxic development loans from bank balance books.
However, it is unlikely that there will be an immediate rush to sell off assets when there is no demand for in the current climate.
Declan Black, head of insolvency and litigation at business law firm Mason Hayes and Curran, said: "If a receiver or liquidator appointed by ACC sought to sell properties promptly, that could set a low threshold for market value and, in turn, impact on NAMA property valuations,"
He added: "Equally, any sale of debt could impact on NAMA's loan valuations."
Mr Carroll lost court protection on day 14 of his examinership action after the Supreme Court, led by Chief Justice John Murray, ruled that his survival plan was not supported by any objective evidence.
The developer had painted a doomsday scenario of hundreds of job losses and thousands of apartments flooding the already depressed Dublin property market.
But the Supreme Court was unmoved by his claims after ruling that he had failed to pass the basic legal test for examinership.
The three-judge court criticised Mr Carroll for relying on outdated valuations by estate agents CBRE and Hooke and McDonald, when those valuations had not been presented to the High Court or the Supreme Court.
The Supreme Court also found that it was not possible for the court to reach any conclusion about the prospects of survival of the companies as a going concern "in the absence of any evidence about the likely future development of the property market".
The court found that in order to persuade it that the companies had a reasonable prospect of survival, "it is perfectly obvious that some evidence of likely improvement in the property market is absolutely essential".
Last night's judgment will have several repercussions for the Government's plan to pass the NAMA legislation next month. It raises the prospect of destabilising the property market, but it also challenges the assumptions underlying the legislation.
NAMA is predicated on the notion that property prices will rise over the next decade or two and that the public should accept that presumption. But yesterday's dramatic judgment challenges that assumption.
The outcome of the Carroll case will raise further questions about the State's setting up of NAMA to buy toxic property loans.
But the Department of Finance insisted the Supreme Court ruling would not have any implications in the setting up of NAMA or its operation.
"NAMA will still be set up in September. This decision does not affect that," a spokesman said. But Fine Gael and the Labour Party have expressed concerns about the exposure of the taxpayer in the setting up of NAMA and the knock-on effects of the Carroll case.
The failure of Mr Carroll to secure court protection could deter other developers from doing so.
"The decision indicates a more stringent application of the test for the appointment of an examiner, especially for development companies," said Mr Black. "A development company seeking the appointment of an examiner would now need to demonstrate clear accounting and valuation evidence showing that it had a reasonable prospect of survival.
"It would also need to demonstrate fairly unequivocal support from its bankers in terms of future funding."
In his petition, Mr Carroll laid great emphasis on the negative consequences of a compulsory liquidation.
He warned of a catastrophic fire sale of assets, that the property market in Dublin could not absorb a portfolio of his scale, and the loss of more than 600 jobs.
Mr Carroll said the market "would be thrown into an unprecedented degree of turmoil", with consequences not just for his group of companies and its creditors.
What Mr Carroll failed to do was give enough evidence to objectively support his doomsday claims.
The judges were also sceptical about the prospects for the property market, questioning whether there would be any positive developments in the availability of credit anytime soon.
Michael Cush, counsel for the companies, sought to reassure the court about the prospects for Mr Carroll's empire.
The judges expressed concern that the court was not being allowed to see the valuations that purported to prove such a turnaround was possible.
Without this evidence, they noted during the hearing and in their subsequent 31-page judgment, it was impossible to work out whether the valuations made sense.
The Supreme Court's decision also leaves some of the country's biggest banks with an immediate and obvious headache. Allied Irish, Bank of Scotland (Ireland), Ulster Bank and KBC Bank (Ireland) will have to return to the courts to begin the process of untangling part of Mr Carroll's property empire and dividing up the losses.
That process will unsettle shareholders, who will be wondering what it means for them -- as the decision goes against the listed banks' stated wishes.
IT felt yesterday as if NAMA itself was on trial in the Supreme Court as Liam Carroll's lawyers battled in vain to save his property empire from crashing to smithereens. In one corner were the three judges, reflecting a sceptical public, while in the other was Mr Carroll's legal counsel, Michael Cush, who seemed at times to be speaking for Finance Minister Brian Lenihan.