A Circuit Court judge has refused to confirm the appointment of an examiner over three companies tied to KC Capital Property Group.
The developer is appealing the decision in the High Court. That will be heard next week.
KC Capital is behind a nine-storey office block on Cuffe Street beside St Stephen’s Green, known as the Greenside Building, with the court hearing it has built up debts in excess of €55 million in the construction phase but just two months of work remain.
David Kennan‘s KC Capital Property Group Ltd, as well as two group companies, sought to have Damien Harper of PUC Consultants appointed as interim examiner in late December. The appointment came days after receivers were placed over the company by its lenders.
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An independent expert report by Myles Kirby of consultancy Kroll advised the court the companies have a reasonable expectation of survival. The examiner’s appointment was due to be confirmed by the Circuit Court in January, but was opposed by its secured creditor.
The developer is also involved in a legal dispute over the supply of allegedly defective concrete by one of its suppliers, Keegan Quarries Limited, from which the companies hope to recover approximately €15 million.
On Monday, Mr Justice John O’Connor of the Circuit Court refused to appoint the examiner.
In his judgement, the judge said the case is a “straight contest” between KC Capital and its lenders. Its investors are “trying to rescue their shareholding” while involved in litigation “they think they will win” and the secured creditor is “trying to maximise its security now, noting the risks involved”. He noted that no substantial creditors are supporting the petition for examinership.
The judge said an examinership would not be in the best interests of the creditors, characterising it as an “unnecessary costly exercise”.
“It is clear in my view there will be no additional jobs saved in the appointment of an examiner. In simple terms it is not necessary to appoint an examiner,” he wrote.
The developers gave notice of their intention to appeal the case.
Before Mr Justice Michael Twomey of the High Court, barrister Ciaran Lewis – acting for KC Capital and advised by Simon Murphy of Beauchamps – appealed for a stay on the order to discharge the examiner over the company.
He argued that it is “important that the protection of the court” remain in place until the appeal is heard. He said the examiner would agree to do nothing until a decision on the matter has taken place.
Barrister Brian Kennedy, representing the secured creditor, a Fairfield Real Estate Finance fund, said his client was owed €55 million, and was “deeply sceptical” of purported investment offers for the asset security. He said that offers are “nowhere near the value” of either the security or the amount his client is owed.
He said that Fairfield, as a secured creditor, is bearing the cost of the examinership. Mr Kennedy said that KC Capital has “no business in operation” and is “effectively an SPV” [special-purpose vehicle] designed to build out the office block. The appointment of the examiner is “really about saving shareholders funds”, Kennedy said.
The judge ruled that the interim examiner will be allowed to make submissions in a “very limited role” to the court but no other work is permitted in an effort minimise costs to the secured lender. The period of court protection will also continue until the appeal is heard.
The case is scheduled to resume on February 25th.
