Banks may attempt to block restructuring of McInerney
Published 14/09/2010 | 05:00
The examinership of McInerney Homes could become the setting for a scrap over the real value of residential property, if banks want to halt a process that could force them to accept settlements of loans below face value.
The High Court yesterday confirmed the appointment of an examiner to the housebuilder and a number of related companies, despite three banks opposing the application. The court has the authority to bind the three banks to a plan, but only if they are offered the same recovery or more than they would get from a receivership.
Mr Justice Frank Clarke confirmed William O'Riordan of PwC as examiner to McInerney. But the judge ruled that the examiner must address a number of issues of concern to the court by early October or the process could be terminated.
The three banks opposed to the plan are Anglo Irish Bank, Bank of Ireland and KBC. They are owed €113m between them. They are opposed to a rescue plan for McInerney and wanted to see a receiver appointed instead of the examiner.
McInerney, on the other hand, claimed it was "an ideal candidate" for the examinership process on grounds including an independent accoun- tant's report, which stated the firms have a reasonable prospect of survival.
McInerney also said that US private equity group Oaktree Capital was ready to pump €40m into the group and presented a business plan that predicts modest growth in the housebuilding sector over the next five years.
A lawyer familiar with the case said McInerney's application to have an examiner appointed succeeded when others had failed for two key reasons. Firstly, the Oaktree money is a substantial sum ready to be invested as part of a pre-prepared rescue plan -- with €10m of that earmarked for McInerney's Irish businesses.
Secondly, McInerney's portfolio of properties includes a higher proportion of completed or close-to-complete schemes.
Other builders, including Liam Carroll's Zoe Developments, failed in their bids to have examiners appointed.
McInerney's business plan presents the company as a traditional and viable business rather than as a property speculator. The plan stressed the long-term viability of its core business of building three and four-bedroom family suburban homes, as opposed to apartments or prestige projects.
The banks' opposition to the examinership could still set the scene for a valuation battle. The banks could try to block a restructuring plan from being confirmed by the court if they can produce evidence that a receiver would realise a better return by selling the assets, or show that they have been treated unfairly or inequitably.
In his ruling, the judge said that while it was possible at this stage to conclude that the firms had 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.