An interim examiner has been appointed by the High Court to two companies in the Keating group of engineering and building services companies.

L & M Keating Ltd and Kilmihil Rental Store Ltd, with registered offices in Kilmihil, Co Clare, are among the leading specialist marine contractors here.

L & M Keating employed 150 directly up to last June but currently has 91 full time employees, of whom 45 are temporarily laid off. Before Covid-19 related site closures, it had engaged an estimated 300 people indirectly through the supply chain. Kilmihil Rental has no direct employees.

L & M Keating is the main trading company in the Keating group and Kilmihil is a plant hire company exclusively supplying plant and machinery to Keating’s projects.

Other companies in the Keating group are not subject to the examinership application.

On foot of evidence put before the court on Friday by Kelley Smith, for the two companies, Mr Justice Denis McDonald was satisfied it was a "classic case" for granting court protection and to appoint Kieran Wallace, of KPMG, as interim examiner.

He noted a detailed report from an independent expert expressed the view the companies have a reasonable prospect of survival post restructuring based on the fundamental strength of their core marine engineering business and subject to a number of conditions.

Ms Smith earlier outlined that the companies were traditionally profitable but, due to several factors including the cessation of works due to the Covid 19 pandemic, and the new costs of going to work in light of the pandemic, they are, or are likely to be imminently, cash flow insolvent, she said.

They had come under significant pressure from creditors and that was among the reasons for seeking court protection, she said. Some 600 trade creditors were owed a combined €9.9 million at the end of August last.

The companies projections for 2020 revealed a fall in turnover of about 70 per cent and a total Ebitda loss for the year of some €3.6 million.

The companies have a number of significant contracts, the Keating brand has successfully expanded into the UK market over the past two years, winning contracts there, and is expected to benefit from the UK’s increased investment in its ports as a result of Brexit, counsel outlined.

They have contracted to receive revenues of €6 million before the end of this year and a further €5 million for 2021/22 and have a pipeline of projects here and in the UK.

The petition stated other factors leading to the examinership application included lossmaking contracts, the short term lack of new work available in the industry and a dispute with the companies' founder and former operator, Louis Keating, on the quantum of surplus cash he wished to extract from the business and the "resulting negative impact" of that dispute on staff and on tensions between consecutive management teams.

The petition said CBD Capital Ltd had, through All Waves Holdings Ltd (AWHL), acquired 77.5 per cent of the issued share capital of the companies in January 2018 and the initial sale transaction was structured to provide for an initial payment to Mr Keating, followed by annual deferred consideration payments over the next three years, plus payment of surplus cash in the business.

Following a disagreement on the amount of surplus cash to which Mr Keating was entitled, a settlement agreed in July 2019 provided for the two companies to fund the buyout of the remaining 22.5 per cent shareholding in the companies as part of a later transaction with Mr Keating that resulted in the entire shareholding of the two businesses being held by AWHL.

The petition said the transactions whereby Mr Keating sold the companies, were, “with hindsight, disadvantageous to the companies and the net result of the sale transactions was that €5.5 million in cash was extracted from the companies by Mr Keating”.

Speculation that the companies’ current cash flow and working capital struggles are due to current management and the actions of CBD “could not be further from the truth” and the current struggles are at least in part a result of how the sale transactions are structured, the petition stated.