Banks chasing McInerney for €113m wanted to 'run firm into ground'
THREE banks owed €113m by housebuilder McInerney adopted an approach of "simply running the business into the ground" whereas a new investor wanted to help regenerate the property market and make a contribution to the Irish economy, counsel for the company told the Supreme Court yesterday.
John Hennessy, for McInerney, was opening an appeal against a High Court decision last February to reject a rescue plan for the business. The appeal is due to last three days.
In February, the High Court's Mr Justice Frank Clarke ruled the rescue would be prejudicial to Belgian bank KBC and he refused to confirm it. KBC, Anglo Irish Bank and Bank of Ireland, who were owed €113m in total, opposed examinership from the start and sought to have a receiver appointed.
Mr Justice Clarke made his final ruling in February after being asked to reconsider an earlier judgment that the plan was also prejudicial to all three banks. The judge was asked to consider new information that €80m due to the two Irish banks out of the €113m was likely to be transferred to the National Asset Management Agency (NAMA).
In his revised decision, Mr Justice Clarke said that even where a survival plan was unfairly prejudicial to just one creditor, it was still unfairly prejudicial.
In the appeal yesterday, Mr Hennessy said that McInerney was arguing that Mr Justice Clarke used the wrong test in rejecting the survival scheme. He [Clarke] did not specify what test he was using in his first judgment and that it had to be inferred from that judgment what the test was.
Mr Hennessy added that Mr Justice Clarke's conclusions in the first judgment were wrong and that he was incorrect in finding KBC, the only "non-NAMA bank", was unfairly prejudiced in his last judgment.
Mr Hennessy said McInerney was a 100-year-old company with a proven track record in the building business and employing 109 people.
Under a survival scheme put forward by a court-appointed examiner, a private US equity fund, Oaktree Capital, proposed investing in the company, including an offer of €25m in full settlement of the debt to the banks.
The appeal, before a five-judge court, continues.