An interim examiner has been appointed by the High Court to a construction company that is currently building over 360 social housing units at five different sites in Ireland.
Blacklough Construction Limited sought the protection of the courts from its creditors as it is insolvent on a cash-flow basis and unable to pay its debts.
Blacklough is currently working on developments for the Respond Housing Association Carrickmines, Co Dublin, Channel College, Malahide Road in Dublin, Athboy Road Navan Co Meath, Charlestown Mullingar Co Westmeath, Dublin and Dundalk, Co Louth.
Building material costs
The court heard that despite its current predicament an Independent Experts Report has stated that the company has a reasonable prospect of survival if certain steps are taken, including the appointment of an examiner who would seek to agree a survival plan with the firm's creditors.
Counsel for Blacklough Ross Gorman Bl said that the firm's difficulties have largely been caused by the unprecedented 33 per cent rise in the cost of building materials the industry has experienced since 2020.
In addition, a potential problem regarding planning permission has arisen regarding the development the firm is working on in Carrickmines, counsel added.
At the High Court on Thursday Mr Justice Michael Quinn said he was satisfied to appoint chartered accountant and insolvency expert Joe Walsh as interim examiner to the company.
The company has 48 employees and also engages the services of subcontractors.
Employees owed
The company petitioned the court to appoint an examiner, who they claim can put together a scheme of arrangement with the company's creditors, which if approved by the court would help the firm survive.
The company has a registered address at Rathcoole, Co Dublin and its sole director is Tara King from Naas in Co Kildare.
Her father Mr Gerard Walsh is the company secretary and has extensive experience in the construction industry.
The court also heard that the examiner will also deal with the company's employees, subcontractors and its trade creditors, who the court heard are owed over €3 million.
Independent Expert Cormac Mohan had stated in his report about the firm that the creditors would do better in a successful examinership compared to if the company went into liquidation.
Seeking the appointment of an examiner, Mr Gorman said that the company was set up in 2010, has been successful at building residential units, and had been profitable until quite recently.
Fixed price contracts
The company was currently building 363 units on five different sites which were the subject of fixed price contracts.
The total contract price of the five sites Blacklough is currently working on €65 million, and to date the company has completed works to the value of €31 million.
The significant rise in raw material for the construction sectors had resulted in the company sustaining loses, counsel said.
It was estimated that the rise in costs, due to factors including Covid-19, Brexit and the War in Ukraine, meant that the company has this year sustained approximate losses of €1.7 million, counsel said.
Counsel said that the firm's main client had agreed to a price increase, however the monies it received were not sufficient to address all of Blacklough's losses.
It is building the units for the housing association Respond, who counsel said are supportive of the examinership application, counsel said.
Counsel said that there was an additional issue at the Carrickmines site, where he said some 48 apartments have been built to roof level.
Planning permission
However, Counsel said that the entity that had engaged Blacklough to carry out the works has been informed by Dun Laoghaire Rathdown Co Council that there is "a significant difficulty" with the site, regarding the precise location where the new properties have been built.
There was a question over whether the location of the new development complies with the planning permission granted for the site.
Counsel said that Blacklough has informed its insurer about that matter.
Due to its financial situation counsel said his client had "skeleton crews" on the sites.
Suppliers and creditors had also been making demands for payment counsel added.
Counsel said that putting the company into examinership would help to bring about a resolution of this situation, as well as seek to secure new investment.
Counsel said that a party is interested in investing in the company.
Mr Justice Quinn said he was satisfied to appoint Mr Walsh as interim examiner,
He directed that the firm's creditors be put on notice of the application and adjourned the proceedings to a date later this month.
