THE PROPOSED 10-year survival plan for the Fleming construction group contains no commitment of continuing financial support from its bank creditors and amounts to a “personalised Nama”, ACCBank has argued before the Supreme Court.
Opening ACC’s appeal against the High Court’s approval last month of a 10-year rescue plan for three companies in the group, which has debts of €1 billion, senior counsel Paul Sreenan said there was no evidence Anglo Irish Bank, Bank of Scotland Ireland or AIB would provide the working capital required to save the group.
Senior counsel Mark Sanfey, for the companies’ examiner, George Maloney, said it was in those three banks’ own interest that finances be committed and the banks had already “overwhelmingly” voted in favour of the scheme.
The Fleming group has debts of some €1 billion, including €260 million owed to Anglo and €21.5 million to ACC. The survival scheme was approved by Mr Justice Brian McGovern in the High Court and was due to become effective last month. As a result of ACC’s appeal, this has been stayed pending the outcome of the appeal.
Mr Justice McGovern said he believed the rescue proposals would turn around the fortunes of the three affected companies – John J Fleming Construction, JJ Fleming Holdings and Tivway – and preserve jobs. He also rejected ACC’s argument the scheme would prejudice it.
The scheme provides for a sale of the group’s contracting arm and other assets to a new company, Donban, for €3.6 million. It also leaves secured bank creditors with effective control of Fleming’s property development business, which has connected sites in Sandyford, Dublin. The banks will have 10 years to realise their security.
The plan also proposes paying unsecured creditors 25 per cent of what they are owed.
Yesterday, Mr Sreenan said the ACC appeal was the first before the Supreme Court aimed at overturning a High Court decision approving a scheme of arrangement. He argued the High Court erred by approving a scheme where there was no commitment from the banks to provide working capital that would allow the firms to trade into the future.
Counsel described the proposed arrangements between the company and the other banks as akin to a “personalised Nama” in which it was intended the banks would manage the companies’ properties and sell them off over 10 years.
This proposed scheme went “beyond the margins of examinership” and should be refused, he submitted. The purpose of examinership was to put in place a scheme of arrangement to allow a company continue to trade as a going concern but what was proposed under this plan was the most profitable assets in the firms would be sold off, which was contrary to company law.
Mr Sreenan said Tivway, which owes ACC €22 million, is manifestly insolvent. He said the money was loaned to Tivway for construction of the Sentinel building in Sandyford, Dublin, but there was no guarantee in the survival scheme that development would be completed. He said the Sentinel property was “a shell” currently worth between €500,000 and €1 million. Tivway could not afford to spend the €3,500 per week required to service the building and had to borrow money to do this, he added.
The appeal before the five-judge Supreme Court, comprising Chief Justice Mr John Murray, Ms Justice Susan Denham, Mr Justice Adrian Hardiman, Mr Justice Hugh Geoghegan and Mr Justice Nial Fennelly, is expected to conclude today.
