The High Court has appointed an interim examiner to Pierse Contracting, one of the State’s largest construction firms.
An independent accountant believes the firm has a reasonable prospect of survival provided certain conditions are met, Mr Justice Brian McGovern was told.
Mr Justice McGovern today appointed chartered accountant John McStay interim examiner to Pierse Contracting and Pierse Building Services, a related company involved in the fitting out and refurbishing of premises, both with registered offices at Mulhuddart, Dublin 15.
The firms employed 700 people at their peak but that number has been reduced to 211 and have bank debts of some €30 million.
The directors of the companies cited the economic downturn and cash flow difficulties - caused by bad debts of approximately €30 million on completed works - as the reasons for seeking court protection.
Moving the examinership petition on behalf of the companies, Rossa Fanning said a report from an independent accountant expressed the view the companies have a reasonable prospect of survival as going concerns if certain steps are taken, including securing approval from the High Court and creditors of an appropriate scheme of arrangement.
The firms require an investment of funds to support their future working capital requirements, the continued cooperation of key suppliers and contractors, and agreement from the National Assets Management Agency (Nama) of survival proposals, the court also heard.
If the firms were wound up, their liabilities would be about €310 million, counsel said.
Mr Fanning said the firms had turnover of more than €300 million during the building boom but expected to have turnover of just €100 million in the year ending April 2011. If the examinership was successful, the companies expected turnover to stabilise at €80 million per year over the following four years.
Counsel said the firms, like many other in the construction sector, got into difficulty because of the marked downturn in the economy and the reduced demand for construction services in Ireland. The companies had bad debts of €30m, which had a detrimental effect on cash flow.
Counsel said €16m of those bad debts were owed by Gannon Homes Ltd for works carried at the new town centre at Clongriffin, Co Dublin, but Gannon Homes had had its loan facilities transferred to Nama. Pierse was trying to ascertain if Nama would discharge some of the agreed indebtedness of Gannon.
Despite the downturn in their fortunes, his clients did not sit on their hands but rather implemented cost cutting measures and reduced overheads from €19 million to €5 million, counsel added.
Four of the firms’ five directors had also “put their money where their mouth is” and had invested a total of €12 million of their personal monies into the firm to stabilise the situation.
Mr Fanning said there was no long term bank debt involved, Pierse was fully tax complaint and did not have a large land-bank. The firms have a total debt of some €30 million to Bank of Ireland, Bank of Scotland Ireland and Anglo Irish Bank, he added.
The directors of Pierse, which has operated since 1978 are Ferghal O’Nolan, Brighton Road, Foxrock, Dublin 18; Charles Norbert O’Reilly, Mount Prospect, The Court, Brennanstown Vale, Foxrock; Gerard Thomas Pierse, Villa Cristina, Torca Road Dalkey; Kieran Duggan, Foxrock Manor, Leopardstown, Dublin 18 and Martin Murphy, Porterstown, Ratoath, Co Meath.
The directors of PBS are Fearghal O’Nolan, Charles Norbert O’Reilly and Adrian Burke of Portersgate, Clonsilla, Dublin 15.
Pierce has been involved in a number of major construction projects including the Dublin Civic offices, the British Embassy, the Conrad and Carton House Hotels, Jervis Shopping Centre and several buildings in the Dublin Docklands. It has also been involved in several public private partnerships such as the contracts of schools, hospitals, and government buildings.
