THE HIGH Court yesterday gave troubled builder McInerney Homes protection from its creditors in the first case of its kind to involve a business with debts destined for State bad bank, Nama.
McInerney has been wrestling with €236 million in debt owed to Irish and British banks since last year, but was close to selling a stake to US-based private equity house, Oaktree Capital, for €40 million, a deal that would have recapitalised the business.
The High Court yesterday appointed Billy O’Riordan of PricewaterhouseCoopers as interim examiner to the company, which gives McInerney automatic protection from its Irish creditors, to which it owes a total of €111 million.
The issue is due to be heard again on September 7th. If the court finalises the appointment of an examiner, this will give the company protection from creditors for up to 100 days, which is designed to allow the examiner time to come up with a rescue plan for the company. The company must demonstrate that it has a reasonable chance of survival for this to happen.
McInerney’s Irish debts are owed to a syndicate of three institutions, Bank of Ireland, State-owned Anglo Irish Bank and Belgian lender KBC. The examinership does not affect its British business or lenders.
State agency Nama is due to take over the debt owed to Bank of Ireland and Anglo later this year as part of the sixth tranche of property related debts. While it does not own the debts at this stage, it has the power to approve or disapprove any deal altering the terms of the company’s loans from these two banks.
It did not comment yesterday on the company’s move for protection. Several weeks ago, the banks involved approached the agency with a set of proposals related to the McInerney debt, but Nama did not accept the plan. It told the institutions to return this week with an agreed position. It is understood that they did not return to the agency this week.
The company’s petition said that the banks have cancelled its overdraft and demanded that it hand over 100 per cent of its takings from house sales, “a decision apparently taken under the direction of Nama”.
McInerney stressed that the request to be placed in examinership was not intended as a hostile move against either the banks or Nama. The group maintains that the examinership will speed up its restructuring process and will ensure a better outcome for creditors than receivership.
If it were to invest, US-based Oaktree is committed to putting €40 million into the company, €10 million of which would be earmarked for its Irish operations. Its involvement would depend on the company restructuring its finances. Oaktree generally buys stakes in the businesses in which it invests for the long term.
