McInerney in receivership after court 'no' to rescue plan appeal
Published 23/07/2011 | 05:00
100 The number of jobs at risk after McInerney court ruling
MORE than 100 jobs were on the line last night as one of Ireland's oldest construction firms, McInerney Homes, was placed in receivership by banks owed €113m.
The move came after the Supreme Court rejected an appeal to a previous High Court decision that refused to approve a rescue plan for the company and a sister firm -- McInerney Contracting -- that had been proposed by directors.
Had the directors been successful, a US-based private equity group, Oaktree Capital, had pledged to inject €54m into the two companies to keep them going and protect jobs.
Supreme Court Justice Donal O'Donnell said the McInerney case was "one further sad illustration of the loss and damage that has been caused by the dramatic expansion and traumatic contraction of the property market in Ireland".
The High Court ruled earlier this year that the directors' rescue plan would be prejudicial to one of the banks owed money -- the Irish arm of Belgian bank KBC, as it is a non-NAMA institution, and so refused to approve the scheme.
McInerney loans belonging to Bank of Ireland and state-owned Anglo Irish Ban were in the process of being transferred to NAMA. A long-term receivership plan proposed by the banks, where they would place McInerney in examinership over an 11-year period, was therefore deemed to be an unviable alternative. Bank of Ireland is the largest creditor.
Under the directors' planned scheme, the banks were set to receive €25m from Oaktree for the settlement in full of McInerney's debts to them. The banks argued that in their own 11-year scheme, they would recover €50m.
McInerney executives including group finance director Enda Cunningham, expressed their "deep disappointment" at the judgment and said it was "highly regrettable" that the banks were unwilling to reach an accommodation with Oaktree. Kieran Wallace of KPMG was appointed receiver to McInerney Homes and McInerney Contracting.
"The inability to reach agreement represents a clear rebuff of external foreign investment into Ireland at a time when the economy is in clear need of such investment," said the directors.
The value of McInerney's landbank slumped by 90pc over the past few years. The original main holding company -- McInerney Holdings -- impaired itto the tune of €156m in 2009 and suffered heavy losses.
McInerney Holdings -- now a shell company -- delisted from the stock exchange last year. The directors said earlier this month that they want to liquidate the holding company at an egm next week, but the move is being objected to by UK rebel shareholder David Nabarro. He wants the board removed and has told shareholders he'll try to secure fresh investment for the holding company, which has no assets.