The Supreme Court allowed ACC Bank’s appeal against High Court approval of examinership schemes for Tivway Limited, John J. Fleming Construction Company and J.J. Fleming Holdings, and proposed an order refusing to confirm the schemes. Denham J delivered the judgment on 4 March 2010.
The High Court had confirmed the three schemes under section 24 of the Companies (Amendment) Act 1990, subject to a minor modification to Tivway’s proposal. ACC argued, among other things, that the schemes did not offer a reasonable prospect of the companies surviving as going concerns and unfairly prejudiced the bank. The companies, examiner and other supporting creditors defended the proposals. The Supreme Court did not decide the unfair-prejudice issue: it held that the schemes failed the statutory survival requirement, so that issue did not arise.
The proposals included selling Construction’s third-party contracting business to Donban Limited, transferring most of its employees, and retaining a property development business while the group’s sites and inter-company balances were realised over as long as ten years. Tivway, a property-holding company with sites in Sandyford, had stopped trading in February 2009. The judgment described Holdings as insolvent and dormant. The High Court had found a reasonable prospect of survival, citing bank support, proposed investment and preservation of jobs.
The Supreme Court held that Construction’s viable contracting operation would leave the company in the proposed sale, while its remaining property business was moribund after the property downturn. It found no reasonable prospect that Construction would survive as a going concern. For Tivway, the court noted that the earlier proposed €10 million investor was no longer involved and that the remaining bank funding described in the evidence was for site security, insurance and overheads, not construction or operational work. The proposed plan, the judgment said, would keep the companies insolvent in a holding position while awaiting a property-market recovery and future bank decisions.
The court said examinership requires objective material supporting a reasonable prospect of survival as a going concern; creditor support alone is not determinative. Because the schemes did not meet that threshold for the companies, the court held it lacked jurisdiction to confirm them. It allowed the appeal and proposed reversing the High Court order and refusing confirmation under section 24(3). The judgment’s conclusion records that proposed order; it does not describe a liquidation or determine what happened to the companies afterwards.