Creditors of troubled building company Lark Developments will be asked next week to approve a scheme of arrangement which would allow the company to remain in business. Under the proposals, Lark's director, Mr Tony Murray, will invest his own funds in the firm to help make payments to creditors and to fund its future working capital requirements.

The Lucan-based firm has been building houses since 1979 but ran into difficulties with debts of around €29 million (£23 million) last year after an ill-fated investment in a hotel development in Co Meath.

Mr Murray is prepared to invest €10,000 in Lark initially and to advance a loan of €3 million within three months to help meet the company's liabilities to its creditors.

Lark has also undertaken to dispose of five properties, the proceeds of which will go to pay creditors. It will also receive a sum of €5.91 million from M&M Construction Company Ltd, with which it has an ongoing trading relationship, while any money recovered by Lark from its investment in Johnstown Hotel & Leisure Company will be distributed to creditors.

There are eight classes of creditors in all and some will fare better than others. Anglo Irish Bank, the company's only secured creditor, is owed €4.93 million and will be paid all of its secured debt, together with accruing interest.

Preferential creditors, which include the Office of the Revenue Commissioners which is owed €3.88 million, will be paid half of the agreed preferential debt within three months and the remainder within 18 months, with the total amount not to exceed €1 million.

For the balance of their unpaid debt, preferential creditors will rank as unsecured. Unsecured creditors, many of them companies in the construction sector, represent by far the largest number of those owed money.

It is proposed to pay them 10 per cent of their agreed debt within three months and a further 5 per cent within 12 months. They will be entitled to a further payment, estimated at 11 per cent, from the sale of the company's properties; a payment, estimated at 15 per cent, from the funds received from M&M Construction and payments based on monies recovered from investment in the hotel if they become available.

The creditors' meetings to consider the proposed scheme will be held on Wednesday.