McInerney may appeal court ruling

BUILDING GROUP McInerney is considering appealing a High Court ruling that has left the company facing the likelihood it will be placed in receivership early next week.

In the High Court yesterday, Mr Justice Frank Clarke refused to approve a proposed rescue plan for the group, which has been in examinership since September.

The proposal included an offer of €25 million in full settlement of a €113 million debt owed to a syndicate of three banks, State-owned Anglo Irish, Bank of Ireland and Belgian lender KBC.

The judge ruled the proposal was unfairly prejudicial to the interests of KBC.

The decision means it will be open to the banks to appoint a receiver to the company once the judge has made final orders relating to the case on Monday.

However, it is understood the company’s executives are considering appealing the decision to the Supreme Court. They are set to meet their lawyers to discuss this possibility at some stage today.

US private equity fund Oaktree Capital had been planning to invest in the group, and was to provide the €25 million cash settlement to the banks, as well as €2 million for unsecured creditors and working capital.

However, a receivership would rule out any investment, and would also leave the jobs of 109 people working for McInerney hanging in the balance.

Before McInerney was placed in examinership last autumn, Oaktree offered a reinstated loan of €60 million to replace the €113 million debt.

Anglo Irish and Bank of Ireland seriously considered accepting this offer, but KBC refused. The final offer was reduced to €25 million to reflect the fact that development land prices fell after the sovereign debt crisis emerged in the Republic in the closing months of 2010.

Oaktree Capital this week returned $3 billion of a total $10 billion fund earmarked for investment in distressed assets as the fund could not find enough troubled businesses in which to place the money.