McInerney and Aer Arann in court battle for survival
Aer Arann and McInerney Homes have been granted interim examinerships by the High Court to try to restructure their operations and attract external investment.
McInerney Homes is saddled with debts of €200 million thanks to a recession which has seen new home construction decline from a high of 88,000 in 2006 to an expected 10,000 this year. The company has completed just 63 net sales so far this year.
In spite of the massive decline in demand, the company has insisted that with €40m in external investment it hopes to secure from British firm Oaktree Capital, it can work its way out of trouble.
However, it said it had been forced to seek examinership after its banks, believed to be Anglo Irish, Bank of Ireland and KBC, cancelled the company’s overdraft facilities and required a 100% “cash sweep” from unit sales.
“The decision by the Irish syndicate to cancel the company’s overdraft was apparently taken under the direction of NAMA,” it said.
Only €10m of the Oaktree investment would actually be put into McInerney’s Irish operations. Nonetheless the company insisted that would allow it to “source new opportunities and re-enter the greater Dublin housing market with new development land sourced at competitive prices”.
The court approved the appointment of interim examiner William O’Riordan of PricewaterhouseCoopers. A confirmation hearing will be held on September 7.
For Aer Arann, the effects of the recession have been compounded by the volcanic ash cloud which descended over Europe earlier this year.
Already reeling from €12m in losses racked up in 2008 and 2009, the airline had actually thought it could come in on budget this year thanks to a new franchise agreement signed with Aer Lingus earlier this year.
However, last night it said losses of €6m have been incurred to date this year predominantly due to the impact of the volcanic ash disruption.
Following the High Court hearing on September 8, Aer Arann expects to remain in examinership for an initial period of up to 70 days.
“The airline will operate as normal in order to preserve as many of the 320 jobs in the company as possible and the hundreds of associated jobs in airports and aviation support services companies,” it said, adding that there would be no disruption to its schedule.
Last night, Ryanair said it will be calling for an investigation into the Government’s Public Service Obligation subsidy from which Aer Arann benefits.
“The Government is paying €10m per year to Aer Arann which is an unlimited company which does not publish accounts,” it said.
SINCE 1990, examinership has been available to ailing but potentially viable companies as a means of recovery.
Examinerships are granted by the High Court. During the court hearing, a petition is presented by the company, a director, creditor or shareholder who holds at least 10% voting rights at a general meeting.
An independent accountant’s report is also prepared outlining the financial position and the company’s prospect of survival. If the court decides to grant the examinership, the High Court places the company under its protection for a period of three months. A court-appointed examiner then reviews the firm’s affairs.
