Carillion collapse pushes Sammon into examinership

Leading Irish building contractor Sammon has been pushed into examinership following the collapse of British construction giant Carillion, the High Court was told on Thursday.

Mr Justice Robert Haughton was told the Irish business got into financial difficulties due to the “devastating collapse” of Carillion for which it was working on a number of projects in Ireland.

The High Court appointed Michael McAteer of Grant Thornton as interim examiner to Kildare-based Sammon Contracting Group and related companies Sammon Contracting Ireland Ltd and Miceál Sammon Woodcraft Ltd.

The judge said that, while the firms were insolvent, he was satisfied to appoint Mr McAteer on the basis that an independent expert’s report had stated the companies had a reasonable prospect of surviving if certain steps were taken.

Education facilities

Sammon, which employs more than 216 people, was hired by an entity that included Carillion to build several education facilities in Ireland. These include: Tyndall College Campus in Carlow; Eureka Secondary School in Kells, Co Meath; Loreto College in Wexford; and Coláiste Ráithín and St Philomena’s National School which are both in Bray, Co Wicklow.

Other projects the group is working on include the Maynooth Educational Campus which, the court heard, is the largest school contract in the history of the State.

It is also working on a school in Cork, a building for Shannon Airport Authority, and housing developments in Waterford and Dublin.

Seeking Mr McAteer’s appointment, barrister Ross Gorman, for the group, said it was hired to build five schools and the institute for education by a special purpose vehicle (SPV) that included Carillion, known as Inspired Spaces.

That contract was worth about €87 million to the group, counsel said. His client was paid on a monthly basis after works commenced in 2016.

However, the collapse of Carillion with debts of more than £1.5 billion (€1.72 billion) has had “a devastating and immediate impact” on the companies, counsel said. Payments from the SPV to the Sammon companies ceased last December, counsel said.

As a result, the group has been unable to pay its suppliers and subcontractors working on those projects.

Counsel said the fallout from Carillion’s collapse in January had “contaminated the entire group and the other projects it is working”. Subcontractors and suppliers have made demands for payment, and one creditor has applied to have one of the firms in the group wound up, counsel said.

In addition, there has been no activity on any of the sites where the company had been carrying out works on behalf of the SPV involving Carillion.

Return to profitability

Sammon was confident that, if an examiner was appointed and a scheme approved, the group would be in a position to complete its contracts on time and return to profitability.

The group has also had discussions with PJ and Mary McGrath of the McGrath Group, which has indicated it will provide support and funding to the Sammon firms during the period of protection.

Counsel said that, going forward, the group, which has a good record, was confident that it would obtain contracts for school and residential projects in the future.

After appointing Mr McAteer as interim examiner, the judge adjourned the matter to April 16th. The judge also directed that the group’s main creditors and Revenue be put on notice of the hearing.