The proposed ten-year survival plan for the Fleming construction group contains no commitment of continuing financial support from its bank creditors and amounts to a “personalised Nama”, ACC Bank has argued before the Supreme Court.
Opening ACC’s appeal against the High Court’s approval of a ten-year rescue plan for three companies in the group, which has debts of €1 billion, Paul Sreenan SC said there was no evidence Anglo Irish Bank, Bank of Scotland Ireland or Allied Irish Banks will provide the working capital required to save the group.
Mark Sanfey SC, for the companies’ examiner George Maloney, said it was in those three bank’s own interests that finances be committed and those banks had already “overwhelmingly” voted in favour of the scheme.
The Fleming group has debts of some €1 billion, including €260 million to Anglo and €21.5 million to ACC. The survival scheme was approved by Mr Justice Brian McGovern in the High Court and was due to become effective last month but, as a result of ACC’s appeal, has been stayed pending the outcome of the appeal.
Mr Justice McGovern said he believed the rescue proposals would turn around the fortunes of the three affected companies - John J Fleming Construction, JJ Fleming Holdings and Tivway - and preserve jobs.
He also rejected ACC’s argument the scheme would prejudice it. The scheme provides for a sale of the group’a contracting arm and other assets to a new company, Donban, for €3.6 million. It also leaves secured bank creditors with effective control of 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.
The plan also proposes paying unsecured creditors 25 per cent of what they are owed.
Today, Mr Sreenan said the ACC appeal was the first before the Supreme Court aimed at overturning a High Court decision approving a scheme of arrangement. Counsel argued the High Court erred by approving a scheme where there was no commitment from the banks to provide working capital that would allow the firms trade into the future.
Counsel described the proposed arrangements between the company and the other banks as akin to a “personalised NAMA” in which it was intended the banks would manage the companies properties and sell them off over a period of ten years.
This proposed scheme went “beyond the margins of examinership” and should be refused, he submitted. The purpose of examinership was to put in place a scheme of arrangement to allow a company continue to trade as a going concern but what was proposed under this plan was the most profitable assets in the firms would be sold off, which was contrary to company law.
Mr Sreenan said Tivway, which owes ACC €22 million, is manifestly insolvent. He said the money was loaned to Tivway for construction of the Sentinel building in Sandyford, Dublin but there was no guarantee in the survival scheme that development would be built out.
He said the Sentinel property is “a shell” currently worth between €500,000 to €1 million. Tivway could not afford to spend the €3,500 per week required to service the building and had to borrow money to do that, he added.
Beginning his submissions, Mr Sanfey, for the examiner, said, under the scheme, 15 employees will remain on with JJ Fleming Construction while 85 will transfer to Donban. The remaining 37 have been seconded to a company to be purchased by Donban.
The appeal before the five-judge Supreme Court, comprised of the Chief Justice Mr John Murray, Ms Justice Susan Denham, Mr Justice Adrian Hardiman, Mr Justice Hugh Geoghegan and Mr Justice Nial Fennelly, is expected to conclude tomorrow.