Pierse lost €31m last year before collapse

PIERSE CONTRACTING, the building company placed in liquidation by the High Court earlier this month, lost €31 million last year while turnover slumped by almost 40 per cent to €205.7 million.

Figures show €75 million worth of inter-company loans, now effectively worthless, were one of the biggest elements in the €212 million deficit that the company had when it was placed in liquidiation.

The High Court appointed Simon Coyle of Mazars as liquidator to the company at the request of unsecured creditors who are owed a total of €50 million by the defunct building business.

Following a number of issues that creditors raised in court, Mr Justice Peter Kelly instructed Mr Coyle to investigate the company’s activities over the preceding 18 months.

According to the independent report, prepared by Kieran Wallace of KPMG, turnover fell by 38 per cent in 2009 to €205.7 million from €328.2 million the year before. The company lost €30.9 million last year, partly due to a write-down in the value of some of its assets.

The figures show that while Pierse’s current assets were €129.46 million on paper when it applied for interim examinership, they are only likely to realise €26.8 million.

Much of this is due to inter-company loans which came to almost €75 million, and are unlikely to be repaid. It also owes €77.4 million on foot of loan guarantees and a further €76.4 million on foot of bonds. The total liabilites came to almost €250 million, and its deficit was €212 million.

One of the loans was €40 million made to Remayne, owned by Pierse Contracting directors and some members of their families. Pierse Contracting advanced it the money to buy a one-third share in the group’s overall holding company, Birmayne. The debt was unsecured and interest-free.

The company originally sought to be placed in examinership, but a hearing on the issue was adjourned when questions relating to the inter-company loans were raised in court. It subsequently sought to be placed in liquidation on the grounds that its situation had changed since it first sought to be placed in examinership last month. It had a deficit of €212 million.

The independent accountant’s report accompanying its original application to be placed in interim examinership shows it has more than 1600 unsecured creditors, many of them sub contractors and suppliers.

Its main Irish holding company, Birmayne, converted to unlimited status in 2009, and as a result the group was no longer obliged to file accounts with the Republic’s companies’ registry.

When it asked the High Court to place it in liquidation, the company acknowledged that unsecured creditors were unlikely to recover anything.

Pierse was working on a number of State contracts at the time. Two schools developments have been taken over by another contractor, Sisk. Wexford County Council has decided to finish a number of projects on which Pierse was working for the local authority.