THE EXAMINER of three companies in the building group owned by Cork developer John Fleming has warned creditors that if a legal claim by ACCBank is successful they will be paid significantly less under the rescue plan.
George Maloney of Baker Tilly Ryan Glennon told creditors in a letter sent this week that they are entitled to attend a High Court hearing next month and make submissions on his survival plan.
The court will decide at the hearing whether to approve the plan for the group, which has debts of €1 billion, employs 650 people and comprises 31 companies.
ACC failed to prevent the appointment of an examiner to another company controlled by Mr Fleming called Tivway last August as it attempted to recover loans of €21.5 million owing on a development in Sandyford, Co Dublin.
Mr Maloney said in the letter that he was disputing ACC’s claim that it should be treated as an unsecured creditor of John J Fleming Construction Company, Mr Fleming’s main building company, which is also in examinership.
The accountant argued that ACC is a “contingent creditor” of the construction company, which would mean that the bank would not be repaid until 2020. Under the survival plan, unsecured creditors would be paid 25 per cent of their outstanding debt on or before December 18th, with a second payment on or before February 28th, 2010. A third and final payment may also be made.
The court will be asked to sanction Mr Maloney’s survival plan, known as a scheme of arrangement, on November 3rd. Mr Maloney said he would seek directions from the court on whether ACC should be treated as a contingent or unsecured creditor. “If you are an unsecured creditor, the outcome of that issue will have a significant impact on the payment that you are likely to receive should the scheme of arrangement be confirmed,” Mr Maloney said.
He said that if creditors wished to make submissions they should file them by next Thursday, and indicate whether they wished to attend the hearing. “You are entitled to attend in person and be heard at that hearing,” said Mr Maloney.
The accountant could not be reached for comment last night.
Under the plan, unsecured creditors will have to write off most of their debt in a deal that will lead to a company, Donban, backed by an unidentified investor, taking over large parts of the group.
The investor is proposing to invest €4 billion, while the group’s three main lenders are willing to provide a further financing. Anglo Irish Bank is prepared to support the plan with €266 million. AIB and Bank of Scotland (Ireland) are willing to provide €130 million and €48 million respectively.
The plan involves the creation of several “reserve funds” to repay creditors over 10 years based on the company’s performance.
