THE FLEMING construction and property development group is likely to be wound up after the Supreme Court yesterday shot down a rescue plan for the business, which owes its banks €1 billion.
The ruling, which came almost eight months after part of the group first sought High Court protection from its creditors, leaves 137 jobs in the Bandon, Co Cork-based business in the balance.
It will also have implications for Nama, which will take over the group’s €260 million debt to Anglo Irish Bank and its liability to AIB, which is said to be €300 million. The State’s bad bank will have to work alongside Dutch-owned ACC and Bank of Scotland, to which the group also owes money.
The five-judge court yesterday ruled that the group, controlled by founder John Fleming, did not have a reasonable prospect of survival as a going concern, and said that a rescue plan, drawn up by its examiner, George Maloney of Baker Tilly Ryan, should not go ahead.
Following the Supreme Court decision yesterday, Paul Sreenan SC, for ACC, which had been seeking the repayment of a €21.5 million loan, sought orders to wind up the companies. ACC had already appointed a receiver over one of them, Tivway, he added.
Tivway originally sought High Court protection from its creditors last July, when Dutch-owned ACC sought the repayment of its debt, which was secured against part of the Fleming group’s development property in Sandyford, Dublin.
The group ran into trouble after it bought and began developing the Sandyford site, which is centred around a partially built 14-story block, known as the Sentinel.
The court appointed Mr Maloney as examiner to the company, and subsequently a number of other group entities, including JJ Fleming Holdings and John J Fleming Construction.
Mr Maloney drew up a rescue plan – known as a scheme of arrangement – which had the support of the group’s other banks.
Under the scheme’s terms, the construction and contracting business would have been spun off to a new entity, Donban, for which a new, unnamed investor had been lined up.
At the same time, the banks were to be given control of the Sandyford properties, with the option of developing them out and disposing of them over a 10-year period.
Giving the court’s ruling yesterday, Ms Justice Susan Denham described the scheme as a “holding plan” involving the sale of the profitable “engine” or construction arm of the group to a new company outside the examinership, leaving behind an impaired property development business, whose future depended on the property market improving.
An examinership was “not a process for sale” and the test was a reasonable prospect of survival as “a going concern”, she said.
Nama is likely to take over Anglo’s and AIB’s loans some time in April. The group will then have to submit a business plan for the properties subject to the loans. If Nama is not satisfied with this, and it believes that the company is insolvent, it can then appoint a receiver. However, the situation is complicated by the fact that ACC and Bank of Scotland, both entitled to appoint their own receivers or liquidators, also have loans secured against elements of the same development, and are not partaking in Nama.
