Troubled Mac Interiors given further day to sort ‘modified’ survival proposal

The High Court has given troubled fit-out firm Mac Interiors more time to see if a new investor is prepared to support a “modified” scheme aimed at ensuring the company’s survival.

Late last week Mr Justice Michael Quinn ruled that the court lacked the jurisdiction to approve a scheme of arrangement put together by the company’s examiner Kieran Wallace of Interpath Advisory.

Had the scheme, which was challenged by the Revenue Commissioners, been approved by the court the company would have successfully exited examinership and continued to survive as a going concern.

After the court’s decision, a proposed investor who had committed funds towards the company’s survival scheme pulled out of the deal.

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However, the examiner’s lawyers told the judge on Monday that a new investor, whose identity was not given in open court, is interested in getting involved with Mac Interiors and potentially funding “a modified” scheme of arrangement.

The judge had given the examiner until Tuesday afternoon to present an alternative proposal to the court.

On Tuesday, James Doherty SC, for the examiner, told the court some further time was required to see if an agreement can be reached between his client and the new investor.

Counsel said that if an agreement is reached it was envisaged the court will be asked to use its discretion to allow Mr Wallace to put “a modified” scheme of arrangement, where there may be more funds available from the new investor, before the company’s creditors.

Dermot Cahill SC, appearing with Sally O’Neill BL, said that finality should be brought to the matter and the court had “no option” other than to make orders winding up what is “an insolvent company.”

Counsel said that what the examiner was potentially proposing in relation to the new investor was “a new scheme” and not a modified one.

Counsel said the examinership process is time-sensitive and the examiner has already had over the 100 days legally allowed to put together the best arrangement possible.

That proposal was rejected by the court, and the examiner should not be allowed to put a new survival scheme to either the creditors or the court, counsel said, adding that the firm’s assets are losing their value as the process before the court continues.

In reply, Mr Doherty rejected any criticisms of the examiner, who, counsel said, was continuing to act in the best interests of all the creditors.

Mr Justice Quinn agreed to the examiner’s request to further adjourn the matter until Wednesday morning.

The judge stressed that if any application made by the examiner to continue the examinership process, then it must be supported by evidence to the court.

In his judgment, Mr Justice Quinn rejected the examiner’s original proposal for returning Mac Interiors, which owes creditors some €27 million, to solvency following opposition by Revenue,

Revenue is owed €14.3 million, including €13.2 million in warehoused debt that would have been almost entirely written down.

Mr Justice Quinn found the only impaired creditor class had been “erroneously formed”.

As a consequence of this finding, no meeting of a validly formed class of impaired creditors has accepted the proposal, which involved a proposed investment from Quartz Holdco Limited comprising a loan of €2.25 million and €1.5 million working capital.

All other tests were satisfied and, the undisputed evidence showed, the plan would provide the company with a reasonable prospect of survival, he noted.