A HIGH Court judge has appointed an examiner to a group of property development and investment companies with liabilities of between ¤11 million and ¤18 million, but believed to have a reasonable prospect of survival provided certain conditions are met.

The Tuskar group controls properties through related companies in which it has invested some ¤50 million and has a 'blue chip' asset base, the court heard yesterday (Tuesday).

The Board and most of the shareholders of Tuskar Asset Management PLC, with offices at John's Gate Street, Wexford, and five related companies had strongly opposed the application for examinership brought by one director and two members of the companies, who between them have invested ¤1.4 million in them.

The application from John Power, James Boggan and Liam Eviston, all with addresses in Co. Wexford, had come like 'a bolt from the blue' as the directors were unaware of the intention to bring it and it had also caused considerable damage to the Tuskar group's business and reputation, Mr. Lyndon MacCann S.C., for the board, said yesterday.

Alan Hynes, in an affidavit on behalf of a majority of the Board, said the petition was brought by a minority of member/creditors of the companies; contained several factual inaccuracies; had severely disrupted negotiations for the rescheduling of debts with secured creditors and had unnecessarily provoked a crisis.

Mr. Hynes also denied claims the group's difficulties were primarily due to how it has been managed and added that petitioner John Power had not raised such issues when he attended group board meetings.

The majority Board had advocated a scheme of arrangement option, rather than examinership. A report prepared for the board by accountant David M. Hughes of Ernest & Young said that, in addition to development funding, the company would also have to raise up to ¤5 million to meet financial deadlines and deal with trading creditors.

Mr. Hughes said he believed the only source for such funding at the moment was the current shareholders who had provided guarantees for some ¤11 million.

The shareholders would have to consider making a further investment in an effort to safeguard their investments or face the prospect of a call on guarantees given by them, the report said.

The Revenue Commissioners and two banker creditors, who between them have loaned some ¤28 million to the companies, adopted a neutral position on the examinerhsip application.

Bank of Scotland Ireland, another large creditor, supported a scheme of arrangement option urged by the Board, while counsel for a creditor investor said his client supported the examinership. That creditor was anxious to know what was the position about guarantees given by him to the companies, counsel said.

Having heard submissions from the parties, Mr. Justice Peter Kelly said 'the plain fact', stripped of all the allegations and counter allegations by the sides, was that the companies are insolvent. There was a dispute about the extent of that insolvency, with the petitioners suggesting liabilities of ¤18 million and the Board suggesting ¤11 million.

As the petitioners had also supplied the required proofs, the court had to exercise its discretion whether to appoint an examiner or direct, as sought by the Board, preparation of a scheme of arrangement under Section 201 of the Companies Act.

The judge said he believed the more favourable option was the appointment of an examiner as it gave a more omnibus protection to the companies, the procedure under Section 201 being more cumbersome.

The petitioners proposed the appointment of Kevin Hughes, of Hughes Blake chartered accountants, as examiner but Mr. MacCann said his clients would prefer the appointment of David Hughes as examiner.

Noting there was no issue as to the competence of either nominee, the judge appointed Kevin Hughes. The judge also directed that all taxes and returns be paid to the Revenue during the examinership.

The petition seeking appointment of an examiner was brought earlier this month by Mr. Power, Mr. Boggan and Mr. Eviston, who between them loaned ¤1.4 million to Tuskar Asset Management and related companies. They claimed that, without court protection, the group was in imminent danger of liquidation because of the downturn in the property sector and other factors.

They said the investors in the companies include individuals who invested 'significant amounts' from self-administered pension funds. The investors also faced additional risks because of personal guarantees entered into, they said.