The survival scheme for the Fleming construction group which has debts of €1bn does not contain any commitment of continuing financial support from its banking creditors, the Supreme Court heard today.
In its appeal to the Supreme Court against the High Court's decision approving a ten-year rescue plan for three companies in the group, ACC have claimed that there there is no evidence that other banks, Anglo Irish Bank Bank of Scotland Ireland and AIB, will provide working capital required to save the group.
However, lawyers for the examiner George Maloney have argued that the scheme is dependent on receiving funding from the banks who have already "overwhelmingly" voted in favour of the scheme.
The Fleming group has debts of some €1bn, including €260m to Anglo Irish Bank and €21.5m to Dutch-owned ACC. The survival scheme was approved by Mr Justice Brian McGovern at the High Court and was due to become effective last month.
But as a result of ACC's appeal, it has been stayed pending the outcome of the appeal.
Mr Justice McGovern said in his judgment he believed the rescue proposals would turn around the fortunes of the three affected companies - John J Fleming Construction, JJ Fleming Holdings and Tivway - and preserve jobs.
He rejected ACC's arguments that the scheme would prejudice it.
The scheme provides for a sale of the group’s contracting arm and other assets to a new company, Donban, for €3.6m. It also leaves secured bank creditors with effective control of Fleming's property development business, which has a number of connected sites in Sandyford, Co Dublin.
The banks will have 10 years to realise their security. The plan also proposes paying unsecured creditors 25% of what they are owed.
Opening the appeal Paul Sreenan SC for ACC said that the appeal was the first case to come before the Supreme Court where an appellant is seeking to overturn a High Court decision approving a scheme of arrangement.
Counsel in setting out ACC's appeal said that Mr Justice McGovern had erred by approving a scheme where there was no commitment from the banks to provide working capital that would allow the firms trade into the future.
Counsel said the arrangements under the proposed scheme between the company and the other banks, Anglo Irish Bank, AIB and Bank of Scotland was like a 'personalised NAMA'. The banks counsel said the banks would manage the companies properties and then sell them off over a period of ten years.
Counsel further argued that the scheme of arrangement approved by the High Court should have been refused because it goes "beyond the margins of examinership."
The appeal before a five-judge Supreme Court comprised of the Chief Justice Mr John Murray, Ms Justice Susan Denham, Mr Justice Adrian Hardiman, Mr Justice Hugh Geoghegan, and Mr Justice Nial Fennelly continues and is expected to conclude tomorrow.