Court relief for builder in €1bn debt

WITH €1 billion in debts and 650 jobs at stake, Cork developer Fleming Construction has been given breathing space after an examiner was appointed to one of its indebted subsidiaries.

The €22 million debt owed to ACC Bank by that subsidiary, Tivway, on the Sentinel Building in Sandyford, Dublin, may only be a fiftieth of Fleming’s overall debt. But for the moment at least, by escaping ACC’s receiver, it allows the parent Bandon-based group to seek ways to meet its debts while seeing what can be gained from the NAMA body.

Also, if ACC had been successful in securing the money owed to it, Tivway would only have been forced to hand over the property on its current value – which at current values, is worth between €500,000 and €1m. That would then have forced other banks owed money by Tivway to massively reduce the book value of loans it secured.

Tivway owes Anglo Irish Bank €268m on a separate development. That debt would have been diluted if ACC had been able to press ahead with the receivership.

In the High Court yesterday, counsel for Anglo said it was supporting the examinership, subject to whatever scheme of survival the examiner produces, as the “least unpalatable option”.

Fleming Construction said the appointment of an examiner would protect approximately 650 jobs. It has widespread interests in retail, residential, commercial and industrial construction, as well as in the pharmaceutical and energy businesses.

Denis McDonald, counsel for ACC, claimed Tivway was not a company “in the ordinary sense of the word” and held only two property assets. If an examiner were appointed and the debts of the Fleming group came under the auspices of NAMA, he said, ACC may find itself “at a disadvantage”.

Mr McDonald also said there was an oversupply of office space in the Dublin market with at least three years supply available in Sandyford and environs.

He said it was “foolhardy” to be going through the examinership process, and the expense it entails, in order to sell the Sentinel building when a receiver could do exactly the same thing.

Yesterday’s decision also has wider implications for a number of other beleaguered developers who are similarly encumbered by debt. Most immediately, it will influence the fortunes of developer Liam Carroll who last Friday, sought court protection to block a threat by ACC to appoint a receiver or liquidator.

Last night, Tivway issued a statement in which it said: “Tivway Ltd welcomes the appointment of an examiner by the High Court today, and are confident that this will allow the time to find a mutually acceptable solution in their dispute with Dutch-owned ACC Bank.”