A potential new investor could provide distressed fit-out firm Mac Interiors with a new lifeline after the High Court determined it could not approve a rescue plan that “erroneously” classed the firm’s creditors, the High Court has heard.
Mr Justice Michael Quinn has given the Northern Irish company’s examiner, Kieran Wallace of Interpath Advisory, until 2pm on Tuesday to present an alternative proposal to the court.
The company, which owes creditors some €27 million, will benefit from continued protection from its creditors until the judge makes an order to the contrary.
Warehoused debt
Last week he rejected the examiner’s original proposal for returning Mac Interiors to solvency on foot of an objection by the Revenue Commissioners, which is owed €14.3 million, including €13.2 million in warehoused debt that would have been almost entirely written down.
In his written judgment, published on Monday, the judge said he agreed with Revenue that he did not have jurisdiction to approve the scheme as he found the only impaired creditor class had been “erroneously formed”.
As a consequence of this finding, no meeting of a validly formed class of impaired creditors has accepted the proposal, which involved a proposed investment from Quartz Holdco Limited comprising a loan of €2.25 million and €1.5 million working capital.
All other tests were satisfied and, the undisputed evidence showed, the plan would provide the company with a reasonable prospect of survival, he noted.
On Monday, Revenue’s lawyers, Dermot Cahill SC, said there must be some finality to the situation. He asked the court to dismiss the application and to appoint a liquidator.
Survival scheme
The examiner’s senior counsel, James Doherty, asked for an adjournment until Tuesday afternoon as Mr Wallace is looking to put in place a new survival scheme. There is support for the company and, while the original proposed investor is no longer supportive of the scheme, there is a potential further investor, he said.
Mr Doherty said it is “very surprising” that a public body such as Revenue would agitate for the winding-up of a company that potentially has a viable future.
The judge granted the adjournment.
In a statement on Thursday, after the judge indicated he would not approve the survival scheme, Mac Interiors’ chief executive Paul McKenna said he was “shocked and disappointed” by the judge’s conclusions.
Pandemic effect
“This decision will have very serious repercussions not only for Mac’s staff and customers, but also for the wider construction industry, which was amongst the hardest hit sectors during the pandemic, and for any business that has warehoused tax debt,” he said.
Prior to petitioning for examinership in June, the commercial fit-out firm was engaged in projects in Ireland worth €72 million.
It was badly affected by pandemic restrictions curbing construction and subsequent inflation on construction materials. It also sustained significant losses from its involvement in a project in Liverpool, England.
Its 41 direct employees have been reduced by 10.
