Court appoints examiner to Pierse over €30m debts
ONE of the largest construction firms in the country was yesterday given High Court protection after a judge heard that it had fallen victim to the economic downturn.
Mr Justice Brian McGovern appointed chartered accountant John McStay as interim examiner to Pierse Contracting and to Pierse Building Services, which is involved in the fitting out and refurbishing of premises for blue-chip clients.
The firms, which employed 700 at their peak and now have 211 employees between them, cited cash-flow difficulties caused by bad debts of approximately €30m on completed works as the reason why they had sought the protection of the court.
Pierse has been involved in a number of major construction projects, including Dublin civic offices, the British Embassy, the Conrad and Carton House Hotels, Jervis Shopping Centre and several buildings in the Dublin Docklands.
Rossa Fanning BL, on behalf of the companies, said the independent accountant's report revealed that they have a reasonable prospect of survival as a going concerns if certain steps are taken. These include getting acceptance from the High Court of an appropriate survival scheme by creditors and members of the companies.
The firms also require an investment of funds that would supports their future working capital requirements, the continued co-operation of key suppliers and contractors and an agreement with NAMA on any proposals put forward in respect of ensuring their survival.
Counsel said that in contrast to this vista, the firms' liabilities would be approximately €310m in the event of a winding-up order.
During the boom, the two firms had turnovers of more than €300m, but they expect to have a turnover of just €100m in the year ending April 2011, counsel told the court.
Pierse expects that if the examinership is successful, its turnover will stabilise at €80m per year over the following four years.
Like many other in the construction sector, it got into difficulty because of the reduced demand for construction services, he said.
Counsel told the court €16m of those bad debts was owed to it by Gannon Homes Ltd for works at the new town centre at Clongriffin in north Dublin. However Gannon Homes has had its loan facilities transferred to NAMA. Pierse was now trying to ascertain if NAMA would discharge some of the agreed indebtedness of Gannon to it.
Counsel said that despite the downturn in its fortunes, Pierse did not sit on its hands, had taken cost-cutting measures and had reduced its overheads from €19 to €5m.
Four of the firms' five directors had "put their money where their mouth is" and had invested a total of €12m of their personal money in order to stabilise the situation.
The firms have a total debt to Bank of Ireland, Bank of Scotland (Ireland) and Anglo Irish Bank of approximately €30m.
The directors of Pierse, which has been in operation since 1978, are Fearghal O'Nolan of Brighton Road, Foxrock, Dublin 18; Charles Nobert O'Reilly of Mount Prospect, the Court, Brennanstown Vale, Foxrock; Gerard Thomas Pierse of Villa Cristina, Torca Road, Dalkey, Dublin; Kieran Duggan of Foxrock Manor, Leopardstown, Dublin 18; and Martin Murphy of Poterstown, Ratoath, Co Meath.
The directors of Pierse Building Services are Fearghal O'Nolan, Charles Norbert O'Reilly and Mr Adrian Burke of Portersgate, Clonsilla, Dublin 15.
The judge made the matter returnable to later this month.