THE PIERSE Group, one of the biggest construction companies in the State, has received court protection from its creditors following a collapse in cashflow and a rise in bad debts.
The High Court yesterday appointed an interim examiner to Pierse Contracting and Pierse Building Services, the two businesses within the group.
The company said its contracting business was trading profitably but it was owed more than €30 million for work that it had completed, of which more than €20 million had been “severely delayed”, causing “serious cashflow problems”.
In a statement, the group’s directors welcomed the appointment of John McStay of McStay Luby as an examiner to the business. Under the examinership process Mr McStay will seek new investment for the group and implement a restructuring plan to keep the viable part of its business in operation.
Pierse chief executive Nobby O’Reilly said he believed the company had a strong chance of survival and was working on contracts with a value of €151.5 million.
The company’s bad debts include a sum of €16 million owed to it by one developer, Gannon Homes, the loans of which have now transferred to the National Asset Management Agency (Nama). The debt relates to work carried out at a new town centre at Clongriffin, Co Dublin.
Rossa Fanning, counsel for the Pierse Group, said this debt had created an intolerable cashflow difficulty, adding that if it was not for this debt the company would not be before the High Court.
Moving the petition for examinership on behalf of Pierse, Mr Fanning said a report from an independent accountant expressed the view that the companies have a reasonable prospect of survival as going concerns if certain steps are taken.
The firms require new funds to support their working capital needs, the continued co-operation of key suppliers and contractors and agreement from Nama on its survival proposals, the court heard.
If the firms were wound up, their liabilities would be about €310 million, counsel said. Over the past two years four of its five directors had “put their money where the mouth is” and injected €12 million of personal funds into the business in order to stabilise the situation.
Mr Fanning said Pierse was fully tax compliant and owed €30 million to Bank of Ireland, Bank of Scotland Ireland and Anglo Irish Bank.
The firms employed 700 people at their peak, but that number has since been reduced to 211. The group has also cut its overheads from €19 million to €5 million.
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.
Pierse, which was founded by Ged Pierse in 1978, has been involved in a number of major construction projects including Jervis Shopping Centre, the Dublin Civic Offices, the British embassy, the Conrad and Carton House hotels and several buildings in the Dublin Docklands.