The bleak year spared no one – as small and big players in the industry were hit and thousands of jobs lost, writes BARRY O'HALLORAN

AT THE beginning of last month, the number of company insolvencies in the Republic was running at just over 120 a month and heading for 1,400 for the year as a whole – double the rate of failure that we saw in 2008.

While no industry was spared, one stood out – development and construction. Every week, the list of companies going into liquidation, being placed in receivership or seeking court protection from creditors was peppered with small and medium-sized property and building-related businesses.

The trend began last year, but at that point the brunt was being borne by the smaller businesses, many of them sole traders who had stepped up their operations to become limited companies. However, as the recession dragged on into this year, bigger names began to topple as well.

The biggest of them all was Liam Carroll’s Zoe Group, whose attempts to have an examiner appointed to allow it the space needed to put a rescue plan together began in July, and ultimately ended in failure in October.

Carroll is mainly associated with large-scale apartment developments in Dublin, although he had branched out into commercial building, including an as-yet unfinished office building on the north bank of the Liffey that was to house Anglo Irish Bank’s new headquarters.

Six of Zoe’s constituent companies, headed by Vantive and Morston, tried to pre-empt ACCBank’s efforts to get it to repay €131 million by seeking the appointment of an examiner, a move which would have given it protection from the creditors to whom it owed €1.2 billion for a three-month period, and allowed it to put together a rescue plan.

The case reached the Supreme Court, which ruled that the group had failed to demonstrate that it had a “reasonable chance of survival”, a key requirement for any company seeking to be placed in examinership in the first place.

But there was a twist. Carroll had been hospitalised, and the group’s lawyers said the company was willing to make more information available to the courts – including a business plan – if it were to get a second chance.

A second bid failed in the High Court, and the process rumbled to a halt in the Supreme Court, which agreed with ACC’s contention that the refusal to disclose all the relevant facts the first time around, and then use them in a second attempt to get the court’s protection, was an abuse of process.

In the course of the second bid, the court was told that stress had impaired Carroll’s own judgment, which led to it not filing information critical to its first bid. Either way, Zoe, whose assets include apartment blocks and development land between Sherriff Street and Dublin’s docks, two hotels in Tallaght, another in Ringsend and a shopping mall in Limerick, are now in the hands of the banks.

Dutch-owned ACCBank’s pursuit of a €22 million loan to companies in the Cork-based Fleming group also forced it into examinership in July. That decision, too, is waiting for the Supreme Court to rule on an appeal taken by the bank against a rescue plan approved by the High Court last month.

The Fleming companies are developing a series of interconnected sites in Sandyford, Dublin. The High Court approved a scheme of arrangement which split the group’s contracting and property development businesses, selling the first to a new company, Donban, for €3.6 million, and allowing the banks to manage the construction and sale of the Sandyford properties over 10 years.

The banks also came calling for personal guarantees given by developers during the boom years. Paddy Kelly and Paul Pardy, both involved in property investment vehicle RQB, consented to High Court judgments against them for €8.5 million which National Irish Bank sought on foot of an overdraft extended to the company.

RQB has since gone into liquidation. One of its backers, Niall McFadden, also sought a judgment against the company. His Boundary Capital vehicle has a stake in Dublin retailer Arnotts. He played a key role in building up that company’s property portfolio, which was supposed to lay the foundation for its Northern Quarter project, which will transform the key retail areas on Dublin’s northside. This is still due to go ahead.

This month, a row over one of the biggest property deals of the property boom, the €412 million purchase of the Dublin Glass Bottle site, came to a climax. The courts awarded judgment for €62.5 million against developer and builder Bernard McNamara, and for €98 million against one of his companies, Donatex.

The judgments were in favour of investors recruited by Davy, who loaned some of the purchase price to Donatex. McNamara gave personal guarantees in relation to the debt. A consortium backed by the developer, property speculator Derek Quinlan and the Dublin Docklands Development Authority, a State agency, bought the site, which is now worth €60 million.

With the property developers virtually wiped out, the only source of investment for the construction business is the State, which is committed to spending on roads, schools, public transport and other infrastructure. In his Budget speech, Minister for Finance Brian Lenihan said the Government is committed to spending €6.4 billion in 2010.

However, the Construction Industry Federation (CIF) warned during the year that individual Government departments had virtually stopped planning for new projects, which in reality means that this money will not be spent over the next 12 months, with the threat of a further 100,000 building jobs being lost.

DKM Economic Consultants estimated in September that around 150,000 construction and construction-related jobs had been lost since the industry hit its peak in 2007. The CIF reckons that without Government investment, around 300,000 jobs will have been lost by the end of next year.

With no money flowing from either the State or the private sector, the industry faces another struggle to get through 2010. Many of its big established players began expanding out of the country, mainly to Britain, during the boom. Prospects elsewhere are bleak enough as well, but there are increasing signs that Europe is beginning to recover, while some of the recent house market data from across the Irish Sea at least indicates stability in demand.

The biggest challenge there will be on the home front, and as attrition continues here, that challenge could well be one of survival.