The High Court has appointed an interim examiner to a construction company that is building more than 360 social housing units at five different sites in the State.
Blacklough Construction Limited has sought the protection of the courts from its creditors as it is insolvent on a cash-flow basis and unable to pay its debts.
Blacklough is working on developments for the Respond Housing Association in Carrickmines, Co Dublin; on Malahide Road in Dublin; in Navan, Co Meath; in Mullingar, Co Westmeath; and in Dundalk, Co Louth.
The court heard that despite its current predicament, an independent expert’s report states the company has a reasonable prospect of survival if certain steps are taken, including the appointment of an examiner who would seek to agree a survival plan with its creditors.
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Counsel for Blacklough, Ross Gorman, said the firm’s difficulties have largely been caused by the unprecedented 33 per cent rise in the cost of building materials experienced since 2020.
In addition, a potential problem with planning permission has arisen for the Carrickmines development, counsel added.
At the High Court on Thursday, Mr Justice Michael Quinn said he was satisfied to appoint chartered accountant and insolvency expert Joe Walsh as interim examiner to the company.
The company has 48 employees and also engages the services of subcontractors.
Scheme of arrangement
Blacklough petitioned the court to appoint an examiner whom it claims can put together a scheme of arrangement with the company’s creditors. If approved by the court, this scenario would allow the firm to survive.
The company has a registered address at Rathcoole, Co Dublin, and its sole director is Tara King, from Naas, Co Kildare.
Her father Gerard Walsh, the company secretary, he has extensive experience in the construction industry.
The court heard the examiner would deal with the company’s employees, subcontractors and trade creditors, to whom the court heard the company owed over €3 million.
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Independent expert Cormac Mohan stated in his report on the company that the creditors would do better in a successful examinership than if the business went into liquidation.
Seeking the appointment of an examiner, Mr Gorman said the company was established in 2010 and has been successful at building residential units. It was profitable until quite recently, he added.
The company is currently building 363 units on five different sites which are the subject of fixed-price contracts.
The total contract price of the five sites Blacklough is working on is €65 million. To date, the company has completed works to the value of €31 million.
The significant rise in raw material costs for the construction sector has resulted in the company sustaining losses, counsel said.
Cost inflation
It is estimated that the rise in costs, due to factors including Covid-19, Brexit and the war in Ukraine, has caused the company to sustain losses of about €1.7 million, counsel added.
Mr Gorman said the firm’s main client had agreed to a price increase. However, the money it received was not sufficient to address all of Blacklough’s losses.
It is building the units for the housing association Respond, which, counsel said, was supportive of the examinership application.
There was an additional issue at the Carrickmines site, where some 48 apartments had been built to roof level, he said.
However, the entity engaging Blacklough to carry out the works has been informed by Dún Laoghaire-Rathdown County Council that there is “a significant difficulty” with the site regarding the precise location where the new properties have been built.
There was a question about whether the location of the new development complies with the planning permission granted. Counsel said that Blacklough had informed its insurer about that matter.
Due to its financial situation, Blacklough had “skeleton crews” on the sites, while suppliers and creditors had been making demands for payments, Mr Gorman said.
Putting the company into examinership would help to resolve the situation and to secure new investment, the court heard. Counsel said a party was interested in investing in the company.
Mr Justice Quinn said he was satisfied to appoint Mr Walsh as interim examiner.
He directed the firm to notify its creditors of the application and he adjourned the proceedings to a date later this month.
