The telecoms firm at the centre of an Oireachtas inquiry into an Iarnr≤d ╔ireann signalling project has closed with a deficit of £9.27 million (€11.77 million).
About 50 people will lose their jobs after the High Court appointed a liquidator yesterday to Modern Networks Ltd (MNL). Mr Ray Jackson of KPMG is expected to complete the sale of the company's assets within two months.
MNL has attributed its financial crisis to difficulties with Iarnr≤d ╔ireann over the signalling plan.
A rise to £50 million from £14 million in the projected cost of that project prompted the Oireachtas Joint Committee on Public Enterprise and Transport to establish an inquiry into the plan. It will sit in September.
MNL's managing director, Mr Brian Powell, said in an affidavit that the company was insolvent.
Mr Powell is one of four Iarnr≤d ╔ireann figures who left to join MNL after the signalling project commenced.
In an opening statement last month, the subcommittee's chairman, Mr Seβn Doherty, said the departures were "of particular concern". All four wrote last year to the Oireachtas committee, asking to give evidence to the inquiry.
Mr Powell's affidavit yesterday said: "I am advised and believe that it is likely that creditors of the company who have retained title to goods will seek to repossess them, and that other assets of the company may be seized by creditors trying to establish a lien."
Citing contracts with Eircom, he added: "I say that due to the inability of Eircom to make a commitment to the company in respect of a sufficient level of future business, there was no basis for the examiner to proceed with negotiations with . . . possible investors."
An Eircom spokeswoman said the company co-operated with the examiner, Mr Jason Sheehy, confirming last Friday the levels of business it was likely to carry out with MNL. "MNL's advisers said this was not sufficient to cover the overheads of the business."
About 55 former Eircom staff who worked for MNL Direct, an Eircom/MNL joint venture, would be redeployed. The joint venture was set up to subcontract cabling work for Eircom.
An estimated statement of affairs, opened in court, valued the assets available for distribution at £2.34 million.
Preferential creditors were owed £676,000. Bank of Ireland was owed £1.17 million as the sole secured creditor.
Some £497,000 remained for distribution to unsecured creditors, who were owed £9.77 million.
When seeking the appointment of an examiner at the High Court in June, the company claimed Iarnr≤d ╔ireann owed it £2 million from an agreement reached last March.
However, the rail company terminated its contracts with MNL and a co-contractor, Alstom, on June 21st.
An advanced payment of £700,000 which had been made by Iarnr≤d ╔ireann was repaid to the company when it called in a Bank of Ireland bond on June 26th.MNL's spokesman said Mr Jay Murray did not control the company, as stated in The Irish Times yesterday. "Mr Murray has, through an associated company, a minority interest in MNL."
