Banks appoint receivers to insolvent Pierse

TWO BANKS have appointed receivers to insolvent building company, Pierse Contracting, to protect their secured debts.

Simon Coyle of Mazars is investigating Pierse group’s trading activities on the instruction of the High Court, which appointed him as liquidator to Pierse Contracting and a related firm, Pierse Building Services, earlier this month.

Pierse Contracting has a deficit of €212 million and owes its unsecured creditors, largely made up of subcontractors and suppliers, more than €50 million.

Documents just lodged with the Companies’ Registration Office (CRO) show that Bank of Ireland and Bank of Scotland Ireland, two secured creditors of the group, have appointed receivers to Pierse Contracting in recent days.

Bank of Ireland is owed around €35 million, and as a secured creditor is entitled to recover its debt ahead of other businesses and individuals to which Pierse owes money. The company acknowledged in the High Court that once its secured debt to Bank of Ireland is paid off, there would be little likelihood that the unsecured creditors would recover any of the €51.7 million owed to them.

The bank has appointed David Carson, corporate recovery partner with accountancy firm Deloitte as receiver to the company. Bank of Scotland Ireland has appointed David Hughes and Luke Charleton of rival practice, Ernst Young as its receivers to the company.

Secured creditors are entitled to appoint receivers to recover their debts from companies that are not meeting their obligations. A receiver’s key role is to recover the creditor’s debt and protect their interests. It is not unusual for such creditors to appoint their own receivers when companies are placed in liquidation.

Pierse was one of the biggest building and civil engineering companies operating in the Republic. At the height of the building boom in 2006, its turnover approached €340 million and profits hit €16.5 million.

It clients included the State and its agencies, for which the company builds roads, schools, utilities and public offices.

By last year, turnover slumped to €205 million and the company lost €31 million.

The company sought High Court protection from its creditors in October, when John McStay of McStay Luby was appointed as interim examiner to the two companies involved in the collapse.

However, when it applied for full examinership, creditors raised concerns about €70 million worth of intercompany loans, and the matter was adjourned.

When the issue returned to the High Court, the company said that circumstances had changed since it originally applied for the appointment of the interim examiner, and its lawyers asked the court to appoint a liquidator.

Mr Justice Peter Kelly appointed Mr Coyle at the request of a number of unsecured creditors and, a result of the issues raised by creditors, instructed him to investigate the circumstances of the company’s trading over the last 18 months.

Other companies have since taken over school building projects on which Pierse was lead contractor.