THE RESCUE plan for the Fleming construction group will strip out the viable parts of the business and leave creditors with the insolvent property development company, lawyers for ACC Bank claimed yesterday.
The group’s examiner, George Maloney of Baker Tilly Ryan Glennon, is proposing a sale of the group’s contracting arm and other assets to a new company, Donban, which is backed by an unnamed investor, for €3.6 million.
The other element proposes leaving secured bank creditors with effective control of its property development business, which has a number of connected sites in Sandyford, Co Dublin. The banks will have 10 years to realise their security.
The High Court must approve the plan, designed to rescue John J Fleming Construction, JJ Fleming Holdings and Tivway, before it can go ahead.
Lawyers for ACC Bank, which has a €21.5 million debt secured against one of the Sandyford sites, argued in the High Court yesterday that the proposals unfairly prejudice the bank.
Barrister Paul Sreenan said ACC would be left with a property that is now worth €1 million and nothing else, while the viable elements of the business “sailed off in to the sunset in a carraige called Donban”. He argued that the scheme did not meet the requirement that it rescues the company and part or all of its businesses, but instead, it proposes selling the profitable element, which would only be allowed in a liquidation.
In response to his query about the ownership of Donban, solicitor Veronica Collins, of Clonakilty, Co Cork, law firm Collins Brook, said that the company’s shares had been vested in her in trust for the new investor, who is not connected with the Fleming group or family.
The rescue plan proposes paying unsecured creditors 25 per cent of what they are owed. ACC argued that it should have been treated as an unsecured creditor.
The bank’s security was guaranteed by John J Fleming Construction. Mr Sreenan said it is relying on this guarantee, for which there is no security, and therefore it should be treated as unsecured. The examiner classed ACC as a contingent creditor.
Mr Maloney’s counsel, Mark Sanfey, had already rejected this argument, saying that members of each different group of creditors were treated equally.
Mr Sanfey told the court yesterday that Mr Maloney has always made it clear that the rescue would involve a third party.
Mr Justice Brian McGovern said yesterday he would give his judgment on November 13th.
