The liquidator of Pierse Contracting, once Ireland's second-biggest construction company, began a High Court action seeking restriction orders against nine of its former directors under section 150 of the Companies Act, 1990, yesterday.
Pierse went bust in 2010 leaving a deficit of €212 million, making it one of the biggest collapses of the bust. About €50 million was owed by Pierse to unsecured creditors, including subcontractors. The directors at the time of the company's collapse included founder Ged Pierse, former chief executive Charles Norbert "Nobbie" O'Reilly and finance director Fearghal O'Nolan.
Its other directors were Kieran Duggan, a former banker with Anglo Irish Bank, Martin Murphy, Michael O'Reilly, Michael McNamara, Matthew Duggan and Brendan Cahalin.
Liquidator Simon Coyle, an accountant from Mazars, said in an affidavit yesterday he was applying for restriction orders because he believed Pierse's directors should have realised sooner it "should cease trading and taken appropriate action to liquidate the company".
“Instead the company continued to trade for a further 12 months, incurring fresh liabilities without ultimately clearing the creditor backlog, bank borrowings or establishing a clear plan to deal with property loans.”
Mr Coyle said he believed the directors could and should have considered various factors when approving and finalising financial statements for the year ended April 2009. They should have “considered and documented the decline in value of the completed properties and the unfinished sites at a time of greatly reduced liquidity in the market place”.
He said they should have “adjusted the accounts to reflect the non-recoverability of €42.9 million owed by the parent companies”. In addition, they should have “adjusted the accounts to reflect the non-recoverability of the €33.4 million owed by subsidiaries of the company that were themselves in a net deficit position”.
They should also have “considered the ‘emphasis of matter’ paragraph in the auditor’s opinion which emphasised the issues in relation to the valuation of the property-related assets, the availability of finance and whether the company was a going concern”.
In his affidavit, Mr Coyle said that if the firm’s directors had ordered the company to cease trading in April 2009, then “the group would not have incurred losses of €24.5 million in the year to April 30th, 2010, when the group’s actual turnover was €144 million compared to the budget of €259.6 million”.
He said Pierse lost another €1.9 million in the three months to July 2010, when the company unsuccessfully tried to restructure itself via examinership.
Directors who are contesting the move by Mr Coyle, are yet to set out their position in full in the ongoing case.
