The High Court recently confirmed the appointment of an examiner to McInerney Homes Limited and a number of related companies in the McInerney group. The Court reaffirmed the test set out in the Vantive Holdings case for the appointment of an examiner. The companies sought examinership after their banking syndicate took certain action, including the withdrawal of their overdraft facilities, rendering the companies insolvent.
The Court noted that the deficit of €110 million in the group’s balance sheet was caused by the impairment of assets following the property crash and a significant injection of capital was required for the group to have any realistic prospect of survival. The Court acknowledged the willingness of a US private equity group Oaktree Capital to invest €40 million in the group and it was noted that the group’s business plan was a realistic approach to its difficulties.
The banking syndicate, comprised of Anglo Irish Bank Corporation Limited, Bank of Ireland and KBC Bank Ireland plc, had opposed the appointment of an examiner on the basis that the group had no reasonable prospect of survival and that it could recover more of its debt through receivership. The Court held that although the syndicate had criticised the group’s business plan, it had accepted the assumptions which underlay this plan in calculating its potential for recovery through receivership.
The Judge said that there were three ways, in which the group could be saved:
- if the banking syndicate came to a consensual arrangement with the companies and the investor;
- if the banking syndicate took a reduction in its entitlements and an alternative lender was put in its place at the reduced level; or
- if revised terms were imposed on the banking syndicate in the absence of their agreement.
He asked the examiner to report to him by 1 October on the likelihood of each possibility being realised.
The matter is back before the Court on 4 October.
William Fry is acting for McInerney Homes Limited and related companies in this matter.
