The High Court has appointed an interim examiner to devise a rescue package for a company within developer John Fleming’s construction group, whose creditors include Anglo-Irish Bank Corporation, which is owed €268 million.
ACC Bank had opposed examinership for the Tivway Ltd, arguing a receiver should be appointed instead as a cheaper and equally effective option.
The bank’s counsel, Denis McDonald SC, also described as “bizarre” some of the survival proposals.
But Mr Justice Brian McGovern accepted Tivway had a reasonable prospect of survival provided certain conditions are met.
The court heard, because of inter-dependency between companies in the Cork-based Fleming group, examinership will protect around 650 jobs. The group has widespread interests in retail, residential, commercial and industrial construction and the pharmaceutical and energy businesses.
The examinership process allows court protection for up to 100 days to a company to allow it trade out of its difficulties.
The court was told two people have cash available to invest in the company, but details of the proposed investment were heard in private by the court because of its commercially sensitive nature.
ACC is a secured creditor of Tivway, owed €21.5 million, while Anglo Irish Bank Corporation is owed €268 million as a contingent creditor.
Anglo was supporting the examinership, subject to whatever scheme of survival the examiner produces, as the “least unpalatable option”, counsel for Anglo, Cian Feritter, said.
After hearing submissions, Mr Justice McGovern said he was satisfied from an independent accountant’s report and evidence presented to the court the firm could survive as a going concern. He said he had to have regard to the fact Tivway’s largest creditor, Anglo, was supportive of the examinership application.
The judge then made orders appointing George Maloney of accountants Baker, Tilly, Ryan and Glennon, as interim examiner.
Earlier, Lyndon MacCann SC, for Tivway, said the company was acquired by the Fleming group in 2006 and is one of a number of subsidiaries with a degree of inter-dependency between each other.
Security for the loans to both banks was provided through JJ Fleming Holdings and JJ Fleming Construction, he said. If Tivway were to go into receivership, it would have a “knock-on” effect in that Anglo would call in its loans to these companies, leading to the group’s collapse, counsel said.
The company lost €41 million last year due to the deteriorating economy, particularly within the property sector.
Under the survival proposals, two pieces of property in Sandyford, Dublin, one called the Aldi site and the other the Sentinel building, would realise income for the company, the court heard.
Sentinel is partly built and three possible options for it were being proposed, Mr MacCann said. The first was to sell it off as is but this would only raise between €500,000 and €1m.
The second is to complete the “skin” of the structure but without essential services and while this would cost €4.5m, it would increase its value to €5.6m, he said. The third option was to fit it out to landlord specification at an additional cost of €6.58m but bringing its value to around €8.9m, making it even more saleable or leaseable.
Opposing the Sentinel proposals, Denis MacDonald SC, for ACC, said there was an oversupply of office space in the Dublin market with at least three years' supply available in Sandyford and environs.
It was bizarre to suggest a plan should be adopted whereby €4.5m should be spent to increase Sentinel’s value to five or six million or spend even more to bring its value to €9m, which was less than half of what is owed to ACC, Mr McDonald said.
It was “foolhardy” to be going through the examinership process, and the expense it entails, in order to sell the Sentinel building when a receiver could do exactly the same thing, Mr McDonald said.
There had been no evidence presented to the court if Tivway went into receivership it would lead to the collapse of the other group companies, Mr McDonald said. Tivway itself had no direct employees but contracted work out to others, the court heard.
