McInerney gets examiner despite banks' opposition
THE HIGH Court has confirmed the appointment of an examiner to housebuilding firm McInerney Homes and a number of related companies.
Mr Justice Frank Clarke ruled that examiner William O’Riordan of PricewaterhouseCoopers must address a number of issues of concern to the court by early October or the process, opposed by a syndicate of three banks which are owed €113 million by McInerney, could be terminated.
In seeking Mr O’Riordan’s appointment, McInerney claimed it was “an ideal candidate” for the examinership process on grounds including an independent accountant’s report which stated the firms have a fair prospect of survival.
Bank of Ireland, Anglo Irish Bank and KBC opposed the move and said they would not support any rescue plan for McInerney as they did not believe it would work.
Mr Justice Clarke said that, while it was possible at this stage to conclude that the firms have a reasonable prospect of survival, he was putting in place the unusual step of having the examiner prepare a report to deal with a number of areas of concern.
McInerney, he said, had recorded losses of €160 million due to a downgrade in its assets.
The judge said he believed there were three ways in which the company could be saved. The first was if the banking syndicate, through the examinership process, could come to an arrangement with the companies and the investor.
Secondly, the existing banks could stay on as lenders against their wishes or, thirdly, a new bank or syndicate could take over the existing loans at a reduced amount. However, the judge said he could see a number of problems with these three scenarios.
He wanted “a clear view from the examiner” in his report if there was any reality to the prospect of the banks, McInerney and their investors negotiating a settlement.
The judge said the report must address whether other banking arrangements can be entered into and if there are any legal impediments preventing the banks from being forced to stay on as lenders to the firm against their wishes.
Mr O’Riordan was confirmed as examiner to McInerney Homes Ltd, Cleaboy Business Park, Waterford, McInerney Holdings Public Limited Company, McInerney Construction Holdings Ltd, McInerney Contracting Ltd and McInerney Contracting Dublin Ltd.
Should the process be allowed continue he has until the end of November to put together a scheme of arrangement that will ensure McInerney’s survival.
McInerney claimed that an investor, US private equity group Oaktree Capital, was ready to pump €40 million into the group. A business plan had also been prepared which predicted modest growth in the housebuilding sector over the next five years.
The companies sought examinership after their banks said they would not be allowed to retain any proceeds of house sales and that its overdraft was being cancelled.
The companies believed that Nama had directed the banks to make that decision.
The banks described examinership as “a raw deal” from their perspective. They were not prepared to fund the companies and would rather take their chances and have a receiver appointed.