The survival plan for three companies in the Fleming group received the unanimous support of its creditors with the exception of Dutch owned ACC bank, the Supreme Court heard today.
The Cork-based group which has interests in construction and developments has debts of some €1bn, including €260m to Anglo Irish Bank and €21.5m to ACC. The survival scheme was approved by Mr Justice Brian McGovern in the High Court, however ACC appealed the decision.
Today, Mark Sanfey SC for the companies examiner George Maloney and John O'Donnell SC for Anglo, rejected ACC's claims that the proposed ten-year survival plan for the Fleming construction group contains no commitment of continuing financial support from its bank creditors and amounts to a "personalised NAMA".
The court also heard that the bank is prepared to pay more than €2m as payment to the unsecured creditors and provide working capital for the companies.
Mr Justice McGovern said 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 also rejected ACC's argument the scheme would prejudice it.
The scheme was due to become effective last month but, as a result of ACC's appeal, has been stayed pending the outcome of the appeal. It 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.
On the second day of ACC's appeal against the High Court's approval of the scheme, Mr Sanfey SC said that there was no question that, with the exception of ACC, all other unsecured creditors had voted in favour of the scheme proposed by the examiner.
Counsel added that there was no question of ACC being prejudiced or discriminated against, as it had been treated the same as every other unsecured creditor. Counsel also told the court that the liquidation of the companies would do nothing for ACC or any other unsecured creditors who will receive between 25% to 40% of what they are owed.
If the scheme is not approved and the companies are liquidated the unsecured creditors will end up with nothing.
ACC had claimed there was no evidence Anglo Irish Bank, Bank of Scotland Ireland or Allied Irish Banks will provide the working capital required to save the group.
However, Mr O'Donnell said that Anglo had taken a commercial decision to support the plan. As part of the scheme it has committed a total of €2m, €1.6m of which would go towards paying the group's unsecured creditors and for other fees it has incurred.
Counsel submitted a letter on behalf of the bank to the court indicating that Anglo was prepared to commit €360,000 to the group as working capital, with the potential of an additional €290,000 being forwarded subject to certain conditions being satisfied.
The court also heard from a solicitor representing 135 unsecured creditors of the Group. Many of those are small businesses based in the Bandon area of west Cork. They are in favour of the scheme being approved and have fears that the area may be badly affected if the firms are wound up.
In its appeal ACC claim the High Court 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.
ACC further claim the proposed arrangements between the company and the other banks is akin to a "personalised NAMA" in which it was intended the banks would manage the companies properties and sell them off over a period of ten years and that the proposed scheme went "beyond the margins of examinership" and should be refused.
ACC loaned €22m to Tivway for construction of the Sentinel building in Sandyford, Dublin. The Sentinel property is "a shell" and ACC claim it is currently worth between €500,000 to €1m.
The appeal before the 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.