The High Court confirmed a scheme of arrangement for M.D.Y. Construction Limited on 15 November 2018, ruling that the company had a reasonable prospect of survival as a going concern and that the proposals were fair and not unfairly prejudicial to creditors who opposed them. Mr Justice Quinn gave his written judgment on 28 November.
The application was brought by examiner Neil Hughes under section 541 of the Companies Act 2014. A number of unsecured creditors objected, including KCC, the largest unsecured creditor, and Sean Smyth Construction. They argued that an alternative investment proposal could produce a better outcome, that the company lacked adequate working capital, and that aspects of the scheme treated creditor groups unfairly.
The confirmed scheme is backed by a €1,452,466 loan from KM Lynskey Construction Services Ltd. It provides for Everyday Finance DAC, the secured lender, to receive €1.26 million in three instalments. Unsecured creditors are due a 3% dividend; contingent creditors are due 0.5%, while connected creditors and contingent personal guarantee creditors receive no dividend. The scheme also provides full payment for leasing, pension scheme, super-preferential and preferential creditors. New shares are to be issued to the investor, cancelling existing shares.
KCC said its own proposal would give the company stronger working capital and could provide a second dividend to unsecured creditors from a disputed claim involving Helsingor Limited. The judgment records that the company claimed €6,205,342 under that contract and Helsingor counterclaimed €3,820,714; the dispute was due for conciliation in February 2019. The court did not determine the claim or endorse KCC’s competing proposal. It held that choosing an investor was a commercial judgment for the examiner and found the objections did not show improper conduct or irrational decision-making.
The judge acknowledged concerns about the speed of the investment process, including that statutory creditor meetings had been convened before the petition hearing. He said this should not be treated as general practice and should require compelling reasons. He did not find that the examiner had acted improperly in this case.
The court also rejected a request to extend protection so a different examiner could develop new proposals. It cited the risk that key client contracts could be lost during another process. The judgment noted that Kildare and Wicklow county councils had indicated they would withdraw termination notices if the confirmed proposals proceeded. The order confirmed the version presented to the court on 9 November 2018.