THE High Court has appointed an interim examiner to one of the state’s largest construction firms, Pierse Construction, after being informed that an independent accountant’s report revealed the firm has a reasonable prospect of survival.
Mr Justice Brian McGovern said he was satisfied to appoint chartered accountant John McStay as interim examiner to Pierse Contracting and Pierse Building Services, which is involved in the fitting out and refurbishing of premises for blue chip clients.
The firms, which employed 700 people at its peak but now has 211 workers, cited the economic downturn and cashflow difficulties caused by bad debts of about €30 million on completed works as the reasons why it has sought the protection of the courts.
The judge made the matter returnable to later this month.
Moving the petition on behalf of the companies Rossa Fanning BL said an independent accountant’s report found the company has a reasonable prospect of survival as a going concern if steps are taken. These include getting acceptance from the High Court of an appropriate scheme of arrangement by creditors of the company.
The firms also require an investment of funds that would support its future working capital requirements, the continued cooperation of its key suppliers and contractors, and an agreement with NAMA of any proposals put forward in respect of ensuring the two firms’ survival.
This contrasted with the fact that on a winding up basis the firms’ liabilities would be approximately €310m.
Counsel told the court that during the building boom the firm had turnover of more than €300m but expects that to be €100m in the year to April 2011. The company expects, if the examinership is successful, turnover to stabilise at €80m a year over the following four years.
Counsel said the firms, like many others in the construction sector, got into difficulty because of the marked downturn in the economy and the reduced demand for construction services. Counsel said that the company has bad debts of €30m, which had a detrimental effect on its cashflow.
Counsel said €16m of those bad debts were owed by Gannon Homes for works carried out at the new town centre at Clongriffin in Dublin. However, Gannon Homes has had its loan facilities transferred to NAMA. Pierce is trying to ascertain if NAMA would discharge some of the Gannon debts.
Counsel said that despite the downturn in its fortunes, the firm did not sit on its hands, had taken cost cutting measures and had reduced its overheads from €19m to €5m.
Counsel added that 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 into the firm to stabilise the situation.
The company told the court it has no long-term bank debt, is fully tax compliant and does not hold a large land-bank. The firms owe Bank of Ireland, Bank of Scotland Ireland and Anglo Irish Bank about €30m.
Both firms are registered at Birmayne House Mulhuddart, Dublin 15.
The directors of Pierse, which has been in operation since 1978, are Ferghal O’Nolan of Brighton Road, Foxrock, Dublin 18; Charles Nobert O’Reilly, Mount Prospect, the Court, Brennanstown Vale, Foxrock; Gerard Thomas Pierse, Villa Cristina, Torca Road Dalkey; Kieran Duggan, Foxrock Manor, Leopardstown, Dublin 18; and Martin Murphy, Poterstown, Ratoath, Co Meath.
The directors of PBS are Fearghal O’Nolan, Charles Norbert O’Reilly and Adrian Burke of Portersgate, Consilla, Dublin 15.
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.
It has also been involved in several public private partnerships, such as contracts for schools, hospitals, and government buildings.
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