The High Court is expected to decide today on the appointment of an examiner to three USIT group companies. Ms Justice Carroll will hear this afternoon if the interim examiner could come to an arrangement with Aer Lingus and IATA, the representative of the airline industry. Both bodies, while stressing they did not wish to see USIT fold, had sought guarantees they would receive payment for carrying passengers.

Mr Martin Hayden SC, said IATA would support the petition provided a facility was put in place where the airlines would receive payment. Mr Lyndon MacCann, for Aer Lingus, said Aer Lingus was incurring a liability of some €5,000 (£3,937) per day post-petition. His client could not contemplate a situation where it was being asked to fly people for free.

Ms Grainne Clohessy, for the directors of USIT Ireland Limited, USIT World.Com and USIT World plc (the holding company for the USIT group of some 35 companies), applied for the appointment of Mr David Hughes as examiner to the companies.

The court heard USIT Ireland has some 400 employees and the group has some 1,000 employees worldwide.

In a lengthy affidavit, Ms Mairin Colleary, a director of USIT Ireland, said the business of that company was essentially sound and, but for some €15 million loaned to other companies in the group becoming irrecoverable, USIT Ireland would be solvent. USIT World.Com provided the essential computer reservation system and other supports for the company while USIT World plc was the company which held 100 per cent of the shares in the other two companies.

She believed USIT Ireland's core business was sound and it had a reasonable prospect of survival provided certain conditions were met including the appointment of an examiner and provision of funding for the course of the examinership.

The funding requirements were calculated at €600,000 which the Student Travel Association (STA) had - subject to certain conditions - indicated it would make available during the protection period. (The STA acquired 82 per cent of the shareholdings in USIT World plc for one euro on January 23rd).

Other conditions included the maintenance of customer confidence in the company and the successful implementation of a scheme of arrangement whereby STA could introduce significant investment funds, and any significant liabilities of the company could, if necessary, be written down.

Ms Colleary said the events of September 11th had posed an immediate cashflow crisis within the group. Sales revenues in the US business which were projected to exceed €200 million had fallen by more than 50 per cent while sales revenues across the balance of the group fell by some 30 per cent. The problems had been compounded by the acquisition of the US travel company, Council Travel Services Inc.

Ms Colleary said allegations had been made regarding certain unauthorised overdrafts "which may have been utilised by other companies within the group" but the directors were satisfied there had been no similar activity on the part of the three companies involved in the application to the court.

Mr Michael Cush SC, for Mr Hughes, presented the latter's report to the judge. Mr Cush said the examiner believed the level of trading showed there was a core business in USIT Ireland which, notwithstanding what might happen to other parts of the USIT group, may be viable. A significant injection of equity was required and STA was willing to enter talks in relation to an appropriate scheme of arrangement. The examiner had some reservations about the long-term survival of USIT World plc.

In relation to the concerns of Aer Lingus and IATA, Mr Cush said the examiner was not in favour of issuing a kind of blank certificate into the future. The examiner would co-operate in trying to reach a resolution of the matter.

Solicitors for the Union of Students in Ireland and USIT Bureau, and for Accident and General Insurance, also supported the appointment of an examiner as did counsel for some 80 employees. The Revenue Commissioners expressed some concerns but maintained a neutral position and counsel for another travel company CIEE indicated his client was a prospective creditor for some €5 million .

Mr Brian Murray, for the liquidator of USIT Limited, said he was neither supporting nor opposing the application.