An order winding up Pierse Contracting and Pierse Building Services with the loss of 109 jobs was made at the High Court today after the heavily insolvent companies withdrew their petition for examinership.
The court heard both companies will have a deficit of more than €212 million and no unencumbered assets on winding up. Their liquidator Simon Coyle, of Mazars, has been asked to investigate a series of issues, including whether the companies continued to trade while insolvent and how such a large deficit was accumulated.
In apppointing Mr Coyle, whose appointment was advocated by Patrick O’Reilly for CF Structures, owed some €5.6 million and supported by several other creditors, Mr Justice Peter Kelly said he felt very sorry for the company’s employees who were losing their jobs “on the threshold of Christmas”.
He also expressed sympathy for its creditors, who were owed “colossal” sums and were “very aggrieved”, feeling they had been “led along by the company when the writing was on the wall” and the companies should have ceased trading long before now.
The company’s trade creditors are owed some €51.5 million.
Robert Dore, a solicitor for several creditors owed some €1.7 million, had written to the Pierse companies interim examiner John McStay saying his clients were “deepy suspicious” of the Pierse directors “who induced them to work around the clock on many projects, in particular national schools, to meet deadlines in circumstances where these directors must have known of the insolvency of the company”.
This insolvency could not have happened overnight but Pierse continued to build up liabilities, “seriously jeopardising the future prospects of my clients and their many employees”, he said.
In an affidavit, Ferghal O’Nolan, a Pierse director, said the monitoring of its cash flow position was an “ongoing priority”. The companies believed, in the months leading up to the petition, they would be part paid some of the €16 million owed to them by Gannon Homes Ltd and some €1.8 million from a schools contract but that did not happen. In the days leading up to its petition, Pierse become aware substantial cash was not forthcoming, he added.
Paul Sreenan SC, for Kilsaran Road Surfacing and Contracting and related companies owed €2.7 million, said it seemed it was decided to continue trading in the hope the Pierse companies would get €6m and €1.8 m when more than €50 million was owed to creditors. It was clear the directors knew the debts were building up and the companies now had no unencumbered assets, he said.
In his interim examiner’s report, Mr McStay said the recent trading history of the companies would require further investigation before a conclusion could be reached on the allegations made in the court proceedings.
Given the developments yesterday, the judge dismissed the petition for examinership and made a winding up order. While no creditor was prepared to fund the liquidation, the judge was informed Mr Coyle was prepared to act as liquidator based on the information now available to him.
The judge ordered the companies’ directors to provide a statement of affairs within 21 days. The directors of Pierse Contracting (PC) are Fearghal O’Nolan, Ti Aisling, Brighton Road, Foxrock; Charles Norbert O’Reilly, Mount Prospect, The Court, Brennanstown Vale, Foxrock; Gerard Thomas Pierse, Villa Christina, Torca Road, Dalkey; Kieran Duggan, Foxrock Manor, Leopardstown, Dublin; and Martin Murphy, Porterstown, Ratoath, Co Meath.
The directors of Pierse Building Services (PBS) are Mr O’Nolan, Mr O’Reilly and Adrian Burke, Portersgate Court, Clonsilla, Dublin.
The companies had secured the appointment of Mr McStay as interim examiner early last month but when their petition to confirm examinership came on for hearing last week, it was adjourned to yesterday after both Mr Justice Kelly and creditors raised a number of issues.
Mr Sreenan had expressed several concerns including that Pierse appeared to have made huge inter-company loans of some €69.4 million. He wanted to know when and over what period the unsecured creditors debts were allowed build up as it seemed unsecured creditors were being asked to “recapitalise” the Pierse companies, counsel said.
Yesterday, Rossa Fanning, for the companies, said their position had significantly deteriorated since they sought protection, had deteriorated again after last week’s hearing and they were no longer seeking examinership but wished to have a liquidator appointed.
Mr Justice Kelly said he was very concerned to have answers to the issues raised by creditors and himself and wanted information on these from the interim examiner and the companies. He adjourned the matter to 2pm so that material could be provided.
In Mr McStay’s report, he said members of Pierse management acquired an equity stake in PC in 2004 through the establishment of Remayne Holdings Ltd (RHL) which later used a €39.8 million loan from PC to buy shares in Birmayne, which owns 99.99 per cent of the ordinary share capital of PC. RHL has no material assets except the Birmayne investment “which must now be regarded as valueless”, he said.
In his affidavit, Mr O’Nolan said the amounts owed to unsecured trade creditors increased signficantly in the two months prior to the companies seeking examinership, due to completion of work on motorway service areas and school contracts and failure to get monies due from those and other contracts.
In those two months, some €16.8 million was paid to unsecured creditors from PC and €4.4 to creditors of PBS, he said. Of €51.5 million owed to sub-contractors, this included some €8.9 million not yet due to sub-contractors which would be paid when corresponding amounts were collected from the companies debtors.
Mr O’Nolan said the companies Estimated Statement of Affairs included an inter-company loan balance of €69.4 million and related company balances of €5.47 million. Most of the loans arose prior to 2007 to part finance developments by Pierse group companies, all the projects were constructed and significant profits were made on the contracts, he added.
Some €13.5 million loaned to Pierse Santry arose from the development of the Metro Hotel and 370 apartments in Ballymun, Dublin. Other companies in the Pierse group owed the petitioning companies sums arising from various projects, including from unsold apartments in completed developments in Liverpool and Manchester; unsold apartments in Marrsfield, Clongriffin, Dublin; a shortfall related to Marino Student Residences; a part-built developoment in Blackrock, Cork and some unsold apartments in Carrickmines.
Of some €35,443 million owed to Pierse, including €16 million from Gannon Homes, the petitioners estimated some 50 per cent may be recovered, he said.
Mr O’Nolan also said loan guarantees for some €77.4 million have been provided in favour of subsidiaries and releated companies. Performance bonds had also been provided by Allianz plc coverig the contracts of the companies and, in the event of liquidation, those amounts had been fully provided for.
