THE HIGH Court has approved a 10-year rescue plan for three companies in the Fleming Construction Group, which has debts of some €1 billion.
Mr Justice Brian McGovern said yesterday he believed the survival proposals would turn around the fortunes of the three companies – John J Fleming Construction, JJ Fleming Holdings and Tivway, they would preserve 137 jobs and eventually give a return to creditors “way beyond what would be achieved in a liquidation”.
He was satisfied that the support pledged by the banks to the companies under the scheme was substantial and there was a reasonable prospect of survival.
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 said.
Rejecting claims by ACCBank that it was unfairly prejudiced by the scheme, he noted ACC had argued 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, he said.
It was clear many of the companies’ debts were being taken over and working capital would be injected into the future. There would be a disposal of assets in an orderly fashion which would benefit the creditors, employees and community at large, he said.
ACC, which is owed some €21.5 million, 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 with three votes, including ACC’s, against. The scheme then came before the High Court.
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 €3.6 million. The development side of the business will continue to trade in “a controlled and structured fashion, with bank support”.
The scheme leaves secured bank creditors with effective control of Mr 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 €21.5 million debt secured against one of the Sandyford sites. Its counsel Paul Sreenan SC had claimed the proposals meant ACC would be left with a property now worth €1 million 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 per cent of what they are owed and ACC argued it should have been treated as an unsecured creditor. It disputed the examiner’s classification of it as 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.
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 Dún Laoghaire.
