The Irish property market could not absorb a portfolio the size of Liam Carroll's in a short period of time, senior counsel Michael Cush told the High Court before Mr Justice Peter Kelly's dramatic decision on Friday to rule out the appointment of an examiner to six of Carroll's companies. However, the prospect of the land coming onto the market is a step closer after Kelly ruled that the companies ? which have borrowings of nearly €1.3bn and form part of what is known as the Zoe Group ? had failed the legal test for the appointment of an examiner.

Kelly said there was "something artificial" about the companies' business-survival proposal, and that it was "most unusual given there was to be no investment and no writedown on debts" because the banks would continue to provide funds.

Later, he said he had the "gravest concerns" about the business-survival plan, saying it was "lacking in reality given the extraordinary collapse" in the property market, and that the projection "borders, if it does not trample on, the fanciful".

"The whole scheme seems to be to help the shareholders," and that was "not the purpose intended" by an examinership, he added.

Mr Justice Kelly is familiar with Carroll and Zoe Developments. In 1997 he famously told the developer he was "not entitled to make profits on the blood and lives of" workers for his company. The comments came after a construction worker died on one of Zoe's sites.

He said Carroll was "a disgrace to the construction industry" and told the developer that Zoe Developments was "a criminal and a recidivist criminal at that, and is so thanks to you", adding that "the workers on whose sweat you make your money are treated with contempt and so are the laws".

Fast forward 12 years, and Kelly said last week that Carroll's Vantive Holdings, and five related companies which together form part of the Zoe Group, had waited until "almost the last possible moment" before seeking the protection of the courts.

That decision came after ACC, the "one bank that has broken ranks with the others" and the "only fly in the ointment", had threatened to have it wound up.

ACC, which is owed €136m in relation to 12 acres of land in Dublin's north docks, had taken a "guarded neutral" position in relation to the petition for examinership, but after it was ruled out its counsel Rossa Fanning said he was "not in a position to give Mr Cush any comfort" in his efforts to have the protection of the courts extended until Tuesday, when an application to allow a Supreme Court appeal will be heard.

After animated discussion with ACC advisers, Fanning said the Dutch-owned bank would prefer that a stay was not granted.

However, Kelly decided that while "putting a stay on a refusal is very unusual", he had to operate in such a way that "the constitutional right to appeal is not rendered hollow" and therefore he granted Cush's request despite "some misgivings".

The case highlights the huge turnaround in Carroll's fortunes. He controls three groups – Zoe, Danninger and Dunloe – and Zoe will basically fall if a liquidator is appointed to Vantive and the five other companies, four of which are already insolvent.

The group's financial ill-health had been known for some time, Kelly said, adding that its survival plan was "written in management speak" and "given the collapse of the property market one could be sceptical" about the figures it included. The banks had backed it, he said, but "they probably had little choice".

The six companies formed part of a larger "Byzantine" structure, "a maze, a spider's web" with Carroll and his senior executives David Torpey and John Pope acting as directors of hundreds of companies.

The judge was clearly irritated by the "inaccuracies" in both the petition and the independent accountant's report, even if these were later rectified. He said the independent accountant's view was based on trading projections and was not responsible for them but his opinion was based on them.

Kelly said that for the group to be able to complete an orderly asset disposal over three years "would be a remarkable turnaround" in the property market's fortunes. "And the captains who navigated the ship onto the rocks are to remain in charge?" he asked earlier in the week. "Yes, judge," Carroll's counsel replied

The judge pointed out that the valuations on which the report was based were out of date and were done by people who had carried out work for Carroll before. He pointed out that despite its "aggressive marketing and pricing policy" the group had only sold 39 apartments since December.

"The banks have show great forbearance" in this case, he said, adding that they had not shown the same restraint with smaller customers.

The banks "stepped back" and advanced additional monies to pay off creditors, with the "notable exception of the Revenue Commissioners". However, he said the banks had had little choice because if they moved it would cause the "collapse of the house of cards".

"If this group ceases to trade the knock-on effects are enormous," Cush had said earlier in the week, but in his judgment. We may be about to find out exactly what he meant.