Fleming’s 10-year rescue plan approved
Mr Justice Brian McGovern said he believed the survival proposals would turn around the fortunes of the three companies – John J Fleming Construction, JJ Fleming Holdings and Tivway; would preserve 137 jobs and eventually give a return to creditors “way beyond what would be achieved in a liquidation”.
He was satisfied the support pledged by the banks to the companies under the scheme was substantial and the three companies had a reasonable prospect of survival, the judge added.
If the scheme was carried out as intended, the debts owed to the secured creditors, the banks, would be eliminated over the 10-year period proposed, he noted.
Rejecting claims by ACC Bank that it was unfairly prejudiced by the scheme, he said ACC argued that the scheme would strip out the viable parts of the business and leave creditors with the insolvent property development company. This was “an exercise in sophistry” as investors were assuming substantial liabilities, the judge said.
It was clear many of the companies’ debts were being taken over and working capital would be injected into the future to ensure continuance of the core business, he said. There would be a disposal of assets in an orderly fashion which would benefit creditors, employees and community at large.
ACC, which is owed €21.5m, will tell the judge on Monday whether it will appeal the court’s decision.
After the Fleming companies were placed under court protection last summer, examiner George Maloney put forward the scheme of arrangement. At creditors’ meetings last month, 290 votes were cast in favour of the scheme and three votes, including ACC’s, against. The scheme then came before the High Court for approval.
The scheme provides for a sale of the group’s contracting arm and other assets to a new company, Donban, backed by an unnamed investor, for €3.6m. The development side of the business will continue to trade in what the judge described as “a controlled and structured fashion, with bank support”.
Effectively, the scheme 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.
ACC had its €21.5m debt secured against one of the Sandyford sites and its counsel Paul Sreenan SC had claimed the proposals meant ACC would be left with a property now worth €1m and nothing else, while the viable elements of the business “sailed off into the sunset in a carriage called Donban”.
The rescue plan proposes paying unsecured creditors 25% of what they are owed and ACC argued it should have been treated as anunsecured creditor. It disputed the examiner’s classification of it as a contingent creditor.
Mr Justice McGovern noted the examiner had, in the schemes, treated ACC the same as other bank creditors with guarantees.
He ruled the examiner’s classification of creditors was correct and there was nothing in that classification unfairly prejudicial to ACC.
The fact ACC does not agree with the other creditors within that classification does not mean they do not have a commonality of interest, he added.
In all the circumstances, the judge said he would approve the schemes with the inclusion of a clause effectively ensuring the Railway Procurement Agency may bring legal proceedings if there is any non-payment of public levies, including levies related to Tivway’s Sentinel development in Dun Laoghaire.
