The High Court has approved a survival scheme for seven key companies in construction giant SIAC which employ about 200 people.
The scheme, subject to some final modifications being approved later this week, will become effective from Monday next.
Mr Justice Peter Kelly today gave the go-ahead for survival proposals which will see a €10.5 million investment in the group, with about €5 million going to secured bank creditors - Bank of Ireland, Bank of Scotland and KBC Bank - owed some €42 million.
The companies have 1,255 creditors, including 876 Irish/UK creditors and 379 Polish creditors, and most of those will get between 5 to 10 per cent of what they are owed.
About €2 million of the €10.5 million is also being allocated for working capital, and the costs of the examinership will be between €400,000 and €500,000.
The judge noted the companies examiner Michael McAteer was satisfied the scheme would place the companies on “a sound commercial footing”. The companies had an “impressive” list of contracts into the future.
It was also “remarkable” and “unique” that no monies were owed to the Revenue Commissioners, and SIAC had been “meticulous” in meeting Revenue obligations, he noted.
While all creditors would be adversely affected by the scheme in the sense there would be a huge writedown of what they are owed, the only alternative was receivership or liquidation, under which most creditors would get nothing, he said.
He ruled the scheme was not unfairly prejudicial to any creditor, as all creditors in each class of creditor were treated equally to others in that same class.
For these and other reasons, he dismissed objections to the scheme by two large Polish creditors, Karmar and CEMEX Polska. Mr McAteer had argued the claims of those creditors were overstated and also said some of their claims had been met by the Polish Roads Authority (PRA).
The judge also said that while he had sympathy for the position of a Polish man who had last December settled a legal action against SIAC Construction Ltd for €110,000 plus costs and who would get just 10 per cent of that under the scheme, he could not find the scheme unfairly prejudiced that man.
The man would be well advised to accept SIAC’s “honourable” attempt to address the man’s claim sympathetically via an offer of an ex gratia payment, the amount of which was not disclosed, to be made without prejudice to his claims, the judge added.
The man’s difficulty was caused by an excess provision of €250,000 in SCL’s insurance which meant his claim would not be met by the insurers, he also noted.
Earlier, the judge noted SIAC, founded 100 years ago, had survived wars and depressions before being felled by the global financial crisis and particularly the downturn in the construction sector here and the collapse of a joint venture enterprise in Poland.
SIAC is pursuing a €120 million claim in litigation in Poland, the court heard.
After the ruling was given, James Doherty, for the examiner, said they had been made aware the Polish Roads Authority intends to claim under the scheme arising from payments it had made to some of SIAC's Polish creditors.
The examiner was satisfied any claim by the PRA would not adversely affect SIAC’s creditors or exceed SIAC’s own €120 million claim, counsel said.
The judge said he would deal with issues concerning further modification of the scheme to incorporate the PRA claim later this week and, subject to approval of those, the scheme would become effective from 5pm next Monday.
Last week, the court heard the companies’ combined workforce of 200 could be reduced by up to 30 people under the scheme, which involves the group being effectively split into two - an operating division and a property holding division. An eighth SIAC company which had also been placed in examinership was wound up last month with the loss of eight jobs.
