Judge rejects Butler examiner petition

A HIGH Court judge has refused to appoint an examiner to the Butler Engineering Group, saying the petitioners had not established there was an identifiable possibility of the companies surviving as a going concern.

After the judgment yesterday, Mr Justice Keane, on agreement between the petitioners and the opposing parties, directed the order be made up forthwith and the injunction granted last week restraining the receiver, Mr Ray Jackson, from acting, be vacated.

The petitioner to Butlers Engineering Ltd and Butlers Engineering International Ltd, Lea Road, Portarlington, Co Laois, was Sureweld International Ltd, Fonthill, Lucan, Co Dublin, and the petitioner to Data Inputs Ltd, a holding company, Northumberland Road, Dublin, was Sababa Ltd, of the same address.

The court had been told at the hearing of the petition last Wednesday that the group had a total debt of over £24 million.

Yesterday Mr Justice Keane said the receiver had been appointed on February 16th on the application of ICC, which was owed £9.2 million.

The petition for the appointment of an examiner had been presented three days later. The petition was unusual in that it was presented not by the directors of the companies but by two other companies which were creditors.

It had been opposed by the receiver, the ICC, Irish International Bank which was owed £3.67 million, and a trading creditor, Preussag Stahl, which was owed more than £1 million. It was supported by five trade creditors.

The Revenue Commissioners and two contingent creditors were neutral.

Difficulties arose in the group when it spent £13 million to expand the company. This resulted in serious financial problems. There was also a dispute with British Steel, forcing the group to pay more for steel supplies elsewhere. The judge said that another reason for the financial difficulties was the recession.

In March 1994, the company's accounts were audited and it had trading losses of over £5 million. The evidence available was significantly limited because of the unsatisfactory state of the books.

The auditors were unable to carry out proper auditing procedures" and stated they were unable to form an opinion as to the companies financial state.

The judge said there was an onus on the petitioners to show there was at least an identifiable prospect of survival of the company as a going concern.

In this case, there was no doubt the companies were insolvent.

There was not a scintilla evidence to suggest there was any proposition to remedy the British Steel situation.

The information regarding investors was sparse indeed and hopes for investors last December? failed to materialise.

Also, it was by no means clear that the present application enjoyed the unqualified support of, all the directors.

The judge said he was satisfied that the petitioners had not established any identifiable case that, the companies could survive as a going concern.