State paid Siac millions ahead of examinership
Construction firm placed in examinership, receiving protection from debts of €68m
Siac’s problems date back to its decision to pull out of a €400 million road project in Poland, where it ended up in dispute with a local authority.
Building group Siac received millions of euro from the State for completed road projects ahead of seeking court protection from its creditors.
The High Court placed Siac Construction Ltd and eight related companies in interim examinership this week, giving them protection from creditors, including sub-contractors and suppliers owed €26 million, along with three banks owed €42 million.
It emerged yesterday that Siac recently agreed and was paid final instalments on two major road projects paid for by the taxpayer and is in talks in relation to a third.
It has been reported that the final payment agreed for the M1 was as much as €12.5 million, but other sources have said it was much less than this, and would have been closer to €3 million.
Shortly before, the group agreed a final payment with the local authority for work on the N4 between Clongowney and McNead’s Bridge in Co Westmeath, which opened last May.
It is in the process of hammering out a final account for work done on Cork’s southern ring road with both Cork Corporation and County Council. That project had an overall value of €21.7 million.
The company did not comment on any of this directly, but pointed out yesterday that it has a turnover of about €100 million a year, and said in that context, “turnover last week was average”.
Unsecured creditors who worked on projects such as the M1 say that they have been waiting for six months or more to be paid and were regularly told by Siac’s representatives that they would receive the money due once its clients had been paid.
A number of unsecured creditors are considering opposing any further extension of the court’s protection or examinership when the matter goes to a full hearing in the High Court on November 6th.
The Oireachtas recently passed new legislation requiring that sub contractors be paid on an agreed staged basis for work carried out on ongoing projects.
The law also allows them to cease working and demand that the issue go to a formal adjudication process if any payments run 14 or more days overdue. However, the writ needed to finally make it law has not been moved as the Government has to first appoint an adjudicator.
Siac’s problems date back to its decision to pull out of a €400 million road project in Poland, where it ended up in dispute with a local authority. The EU froze almost €900 million in development support to the country amid a growing controversy over corruption there.
The withdrawal from Poland left the group with cash-flow problems, which sources say would in turn weaken its hand in any negotiations over payments due to it for projects. As a direct knock-on from that problem, it could end up receiving lower payments than expected for completed work.
However, State agencies are barred from using external financial factors as bargaining chips when negotiating with construction companies.
Siac said it could not comment on any specific case. In a statement it pointed out that it was doing all that it can to lessen the impact of its examinership on “all of our valued partners”.
It argued that not taking a proactive approach to its problems would have had a greater potential impact on its partners and suppliers.
Examinership allows companies facing insolvency up to 100 days to come up with a rescue plan for the business.