Ruling next week on O’Flynn application

The High Court will decide next week if it will dismiss an interim examiner appointed to four main companies in the Cork-based O’Flynn Construction Group.

Brothers Michael and John O’Flynn, of Ballincollig, Co Cork, have asked Ms Justice Mary Irvine for an injunction stopping the examinership in its tracks on the grounds that the initial application had been wrongly made.

Ms Justice Irvine told counsel for Carbon Finance Ltd, an Irish-registered subsidiary of US private equity group, Blackstone, who applied for the examinership, that she would strive to give judgment next Wednesday.

Michael McAteer, of Grant Thornton, was appointed interim examiner to O’Flynn Construction Co, O’Flynn Construction BTC, O’Flynn Construction (Rochestown), and Eastgate Developments (Cork).

Mr McAteer was appointed on Tuesday, only hours after Carbon Finance had appointed a receiver to “a myriad” of O’Flynn companies in and outside of Ireland, including the four key Cork companies, and had removed Michael and John O’Flynn as directors and replaced company boards.

The O’Flynns, in separate proceedings that may not be heard for months, are claiming damages against Carbon Finance on the basis that they and their companies had been seriously damaged by the appointment of receivers followed by the appointment of the interim examiner.

Counsel for both parties finalised their submissions to the High Court yesterday, following a three-day hearing of sworn affidavits setting out the background the current situation.

The court heard that Carbon Finance put in a receiver following a demand for the immediate payment by Michael O’Flynn of a €16m personal loan which had not been met.

Mr O’Flynn claimed he had not been given enough time, only two and a half hours, to meet the debt, and alleged he could have done so had the timescale been “reasonable”.

The O’Flynns and their companies claimed that Blackstone in May had bought from Nama around €1.8bn in loans which the O’Flynn companies had provided guarantees over, and had then set about triggering a loan default, calculated to cause cash-flow difficulties, so it could take over the O’Flynn Construction Group and its assets.

Eoin McCullough, counsel for Carbon Finance, told the court yesterday that the O’Flynn brothers had misunderstood their role in running the group after Blackstone had bought the €1.8bn debt for just over €1bn.

He said that, since the O’Flynn Group was “balance-sheet if not cash-flow” insolvent, its directors should have been acting solely in the interest of Carbon Finance and other creditors and not themselves.

Mr McCullough told the court that the O’Flynns were only there as trustees of the assets that belonged to Carbon.

Michael Cush, counsel for the O’Flynns and their companies, had argued that there had been “staggering non-disclosure” by Carbon Finance when it sought the appointment of the interim examiner and had failed to provide the court with an independent accountant’s report.

In an affidavit, Michael O’Flynn said his group had made an offer of around €240m for the Irish side of the business, including personal borrowings, after learning that Blackstone had no real interest in the Irish assets. It had been rejected.