High-profile building firm granted court protection
One of the largest construction firms in the Republic has been given High Court protection after a judge heard it has fallen victim to the economic downturn.
Mr Justice Brian McGovern appointed chartered accountant John McStay as interim examiner to Pierse Contracting and to Pierse Building Services which are involved in the fitting out and refurbishing of premises for blue-chip clients.
The firms, which employed 700 at their peak and now have 211 employees, cited cash-flow difficulties caused by bad debts of approximately â‚¬30m on completed works as the reasons why it has sought the protection of the court.
Pierse has been involved in a number of major construction projects including Dublin Civic offices, the British Embassy, the Conrad and Carton House Hotels, Jervis Shopping Centre and several buildings in the Dublin docklands.
Legal counsel on behalf of the companies said that an independent accountant's report has revealed that the companies have a reasonable prospect of survival as going concerns if certain steps are taken. These include getting acceptance from the High Court of an appropriate survival scheme by creditors and members of the company.
The firms also require an investment of funds that would support future working capital requirements, the continued co-operation of key suppliers and contractors, and an agreement with NAMA of any proposals put forward in respect on ensuring the two firms' survival.
If wound-up now, the firms' liabilities would be approximately â‚¬310m, legal counsel said.
During the building boom, the firms had turnovers of more than â‚¬300m, but expect to have a turnover of just â‚¬100m in the year ending April 2011, counsel said. The company expects, if the examinership is successful, its turnover to stabilise at â‚¬80m per year over the following four years.
The firms, like many other in the construction sector, got into difficulty because of the marked downturn in the economy and the reduced demand for construction services in Ireland. Counsel said â‚¬16m of bad debts was owed to the firms for work carried out at a new town centre in Dublin.