The High Court refused a petition by Fergus Haynes (Developments) Limited to appoint an examiner, finding that the evidence did not establish a reasonable prospect that the company or any part of its undertaking could survive as a going concern.
Ms Justice Laffoy delivered the judgment on 1 September 2008. The company’s petition was presented on 20 August, after its board passed a resolution to seek an examiner. A separate winding-up petition brought by creditor Atradius Credit Insurance N.V. was adjourned pending the decision on the examinership application. Atradius argued the application was a reaction to its winding-up petition; the judge said it was reasonable to draw that inference from the evidence.
The company had stopped actively trading in April 2008 after a downturn in the property market. Its principal development was Stracomer in Bundoran, where 20 of 79 planned homes had been sold and 33 homes in the first phase were at varying stages of construction. Binding sale contracts existed for four units, but the company could not complete them. Bank of Scotland Ireland and Bank of Ireland opposed an examiner’s appointment and said they intended to rely on their security. The court was told there was no arrangement for further Bank of Ireland funding.
The company’s case relied on completing Stracomer over three years, restructuring liabilities and attracting investment. The independent accountant’s report said survival could be possible subject to conditions, including sale proceeds meeting directors’ estimates, supplier support and no additional completion liabilities. The judge noted that the report relied on the directors’ estimates and that there was no objective valuation, evidence suppliers would support the company or identified source of fresh investment.
The court also considered the company’s estimated liabilities of €19.407 million. It noted a claimed debt of about €3.6 million owed by director Fergus in connection with the Kinloch development, which he personally owned, and inconsistencies in the evidence about creditors associated with that project. The judge made no finding on a creditor’s submission that this exposure might involve a prohibited credit transaction, saying it might be for another day.
The legal test required the court to be satisfied on the evidence that there was a reasonable prospect of survival. The judge concluded that there was no evidence of a prospective investor, future supplier support or a workable arrangement with the secured banks. She also found the projected improvement between winding-up and going-concern valuations was based on directors’ estimates without independent assessment. The order refused the petition. The judgment did not grant an examiner appointment.