The company behind a renewable energy project launched last year by Taoiseach Enda Kenny has been granted High Court protection from its creditors.
The court on Monday appointed Michael McAteer of Grant Thornton as interim examiner to Mayo Renewable Power, which plans to build a wood-chip burning electricity generator at Killala at a cost of €180 million.
Mayo Renewable Power's plans ran into financial difficulty in recent weeks and this was compounded when a company that had been hoping to supply the Irish plant with fuel sued its promoter for $60 million in a New Jersey court in the United States.
In May, British bank, Barclays, one of three lenders that were originally meant to contribute €118 million to the project, pulled out as a result of the uncertainty surrounding the UK vote to leave the European Union.
Neither it, nor the project's other lenders, AIB and Ulster Bank, have provided any finance. Mayo Renewable's lead backer, Irish American businessman's Gerald C Crotty's Weichert Enterprises has spent €90 million on the development, €10 million more than it originally planned, through its parent, US-registered Rockland Mayo LLC.
Mr Kenny laid its foundation stone last October but the project ran into a number of difficulties and building was suspended last month.
One of the problems was with sourcing a boiler, a key component. The banks’ consent to a change of supplier was required, and this delayed funding.
The High Court heard that builder John Sisk & Son is the main contractor and there are 130 sub-contractors and suppliers. The construction company has sought €17.5 million for work done.
If the court confirms Mr McAteer’s appointment when the case is returned on September 12th, he will have up to three months to come up with a rescue plan for the company.
Creditors will not be able to enforce debts against the business during that time, although it is open to the examiner to pay suppliers if he believes it is in the company’s best interest.
At the High Court on Monday afternoon, Mr Justice Tony O’Connor said that he was satisfied to appoint Mr McAteer of Grant Thornton as interim examiner to Mayo Renewable Power Ltd after being informed that the company has a reasonable prospect of survival as a going concern if certain steps are taken.
These include the examiner helping to securing additional investment that would allow the plant to be built. He said that nine potential investors have expressed in the venture from some nine major investors.
The examiner would also put together a scheme of arrangement with creditors, which if approved by the High Court, would allow the company to continue trading.
Mayo Renewable Power’s lawyer, James Doherty SC, told the court that an independent experts report said in the event of it being wound up the deficit would be more than €100 million. On a going concern basis, that shortfall was a little over €200,000.
The company intends to initially import fuel from north America, but ultimately plans to buy it from Irish suppliers. It will employ 130 people when it is up and running.
