Saturday, March 06, 2010
A LIQUIDATOR was appointed by the High Court yesterday for the winding up of three insolvent companies in the Cork-based Fleming building group, which has debts of more than €1 billion.
The move followed a unanimous decision of the five-judge Supreme Court to refuse court protection for the group after finding the proposed survival schemes for John J fleming Construction (JJFC), JJ Fleming Holdings (JJFH) and Tivway did not amount to a plan with a reasonable prospect of survival as "going concerns".
On the application of Paul Sreenan, for the ACC bank, which is owed €22 million, Mr Justice Brian McGovern made an order appointing chartered accountant Tom Kavanagh as liquidator.
The judge said the position of ACC had been vindicated by the Supreme Court in its decision the previous day.
Mr Justice McGovern also made orders allowing the liquidator to continue trading as necessary and to retain or discharge employees, along with putting in place security staff as necessary.
The judge directed a statement of affairs be filed by the companies within 21 days and adjourned the matter to April 26.
Lyndon McCann, for the insolvent companies, had sought the appointment of a different liquidator and was supported by Ted Hallissey, solicitor representing a large number of creditors.
But the judge said he was appointing Mr Kavanagh, who would be subject to the supervision of the court.
The Fleming group has total debts of some €1bn, including €260m to Anglo Irish Bank, along with liabilities to a number of other banks and hundreds of unsecured creditors. All but ACC had supported the survival plan.
The Supreme Court held the survival package was a "holding plan" involving the sale of the profitable "engine" or construction arm of the group to a new company outside the examinership, leaving behind an impaired property development business.
About 137 people were employed by JJFC but even if the survival plan had been approved all but 15 of those jobs were to go to the companies outside the rescue scheme, the judge added.
She also noted both JJFC and JJFH were unlimited companies whose shareholders John and Noreen Fleming had transferred €3m of their assets to trust funds in May 2009 and also pledged some €5m to the proposed survival schemes.
ACC had said the guarantees of Mr and Mrs Fleming in the two unlimited companies were significant to it and approval of the schemes would deprive it of that "route" to the Flemings.
In addition, the judge held if the schemes was approved it would terminate the liability of shareholders and the Companies Act was not designed to immunise company principals or shareholders from the consequences of financial difficulties, according to Ms Justice Denholm.
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