Building companies get court protection from creditors

Two building companies involved in the construction of rural housing have been given the protection of the courts from their creditors.

Trinity Homes Ltd (THL), and a related company, Yeronga Ltd, are involved in the construction of new housing units primarily in rural parts of the State, including Wexford, Tipperary, Kerry and Meath.

Many of the units have been built for local authorities. The companies have also constructed units for the housing charity Cluid.

However, the two companies, which were established in 2014, are currently insolvent and unable to pay their debts as they fall due.

The companies claim their difficulties have been caused by various factors, including the delay caused by the shut-down of building sites due to the Covid-19 pandemic, an increase in the cost of building materials and an inability to meet scheduled repayments on loans advanced to them.

Another cause of difficulties arises out of an arrangement to buy the shares of a former director of THL for €3 million. It is accepted that, as part of that arrangement, over €900,000 of THL’s money was paid to the former director.

The court heard that THL accepts that this payment, which was made because THL did not have sufficient distributable reserves, breached company law and will have to be investigated.

Funding

The court heard that the companies' main source of funding is through the Immigrant Investment Programme, where non-EU/EEA citizens committing sums of over €1 million for three years are invested in Ireland. Persons who invest in this programme can obtain residency in Ireland and ultimately Irish citizenship.

The companies, which had been profitable between 2015 and 2019, had borrowed over €11 million through this programme.

THL's directors are Stephen Mahon, who is also a 75 per cent shareholder, and Ecaterina Olaru, both of Quarrylands, Dunboyne, Co Meath, and Ben Reid, of Navan Road, Dublin. Mr Mahon and Ms Olaru are directors of Yeronga.

Applications to have the companies placed in examinership, on the basis that the companies have a reasonable prospect of survival if certain steps are taken, came before both the High and Circuit Courts last week.

The companies, represented by John O'Donnell SC, and Ross Gorman BL instructed by solicitor Graham Kenny, successfully petitioned the Circuit Court for the appointment of experienced insolvency practitioner John Walsh as interim examiner.

Separately, two firms that represent the companies' foreign investors asked the High Court to appoint another insolvency practitioner as interim examiner to THL.

The two entities, Project Trinity Homes Ltd and Project Trinity Homes 2 Ltd, which are represented by John Kennedy SC, are owed a total of €9 million by the companies. They claim they have concerns about the running of the building firms and want an investigation.

Application

That application came before Mr Justice Michael Quinn last week, who declined to appoint an interim examiner while only one side was represented in court. However, the judge made certain directions in the case and adjourned the matter.

When the case returned before Mr Justice Quinn on Wednesday, lawyers for the companies and the investors argued about which court the examinership should be before.

However, following what were at times robust exchanges between counsel for the parties, the sides entered into out-of-court discussions. Arising out of those talks, it was agreed that the matter should go back before the Circuit Court later this week.

It was further anticipated that the examiner application before the High Court would ultimately be struck out.