Receivers took control of Roadbridge late on Friday as it emerged that the builder could owe at least €40 million to sub-contractors and suppliers.
Bank of Ireland appointed Stephen Tennant and Nicholas O'Dwyer of Grant Thornton to Limerick-based Roadbridge Holdings Ltd after the company's board asked the lender to appoint receivers.
The move leaves 630 jobs in the Republic, UK and Sweden hanging in the balance, but could affect up to 1,000 livelihoods as large numbers of sub-contractors will be caught in the fallout.
Roadbridge owes about €35 million to Bank of Ireland, but has trade liabilities said to be about €40 million, owed mostly to sub-contractors, suppliers and other businesses.
Many of the trade debts are substantial. At least one supplier is owed more than €1 million, insiders say.
Contractors began moving machinery and equipment from Roadbridge sites earlier this week as it emerged that efforts to find an investor or buyer for the business had failed.
Roadbridge Holdings accounts for 2020 show it owed €60 million to trade creditors at the end of that year, against €44 million 12 months earlier. Trade liabilities can vary widely from year to year.
Bank of Ireland holds securities over many of Roadbridge’s assets, giving it the right to appoint receivers to recover its debts.
In a statement on Friday, Roadbridge said “insurmountable financial challenges” forced the board to request the bank to appoint receivers.
Founded in Limerick in 1967 by the Mulcair family, Roadbridge civil engineering and construction group is best known for its work on motorways and State projects.
It built Dublin Airport’s new north runway jointly with FCC and was one of several companies involved in the construction of the Limerick tunnel.
Roadbridge chairman Aidan Murphy said: "We have been working tirelessly for the last number of months to find a solution to the grave challenges faced by the company.
“My fellow directors and I greatly regret having to take this step, but unfortunately, it was the only possible option at this time.”
He added that the board recognised the support of Bank of Ireland, and all stakeholders, in difficult circumstances as the directors sought every opportunity to save the company.
“We are committed to working closely with the receivers now in order to get the best possible outcome for employees, creditors and stakeholders,” Mr Murphy said.
Roadbridge has building contracts worth a total of €750 million over the next two to three years.
Sources suggested on Friday that this may allow the receivers to save elements of the business. They also said it could be possible to rescue its overseas subsidiaries.
Advisers IBI Corporate Finance had been seeking an investor or buyer for the company since last year.
Several sources this week confirmed that liquidation or receivership, where a bank or other creditor takes control of a business, looked the more likely options for the group.
Roadbridge specialises in large projects worth tens or possibly hundreds of millions of euro each. Insiders say that it has traded on very tight profits, between 1.5 per cent and 2 per cent, leaving little room for error or unforeseen risks.
Brian Coogan, chief executive of the Irish Plant Contractors' Association, warned that he knew of other builders likely to follow Roadbridge after a year of soaring energy and construction materials costs.
Many of Mr Coogan’s members will be hit by the Roadbridge receivership. He argued the State’s policy of favouring only the lowest bids for large construction jobs would drive more companies out of business.
He said many builders and sub-contractors were struggling to deal with rising expenses following 12 months of sustained inflation.
“We have to deal with the permanent government and the permanent government has a policy of now allowing construction firms to make money,” he said.
In a statement on Friday evening, the Tánaiste and Minister for Enterprise, Trade and Employment Leo Varadkar described the receivership news as “extremely concerning”.
“My thoughts are with the employees, many of whom I know dedicated their entire careers to the company,” he said, adding that he had asked his officials and those in Enterprise Ireland to engage with the company as a matter of urgency.
“I am very aware of how disappointing this news is for the company’s hundreds of employees and the wider community. The Government is on hand to help in whatever way it can.”