Pierse Contracting – liquidator appointed. Allegations to be investigated following sharp criticism from Judge Kelly.

In a dramatic development at the High Court this morning, NAMA-bound developer and third biggest construction company in the State (after Sisk and McInerney), Pierse Contracting has applied to the High Court to be placed in liquidation. The company is presently afforded protection from creditors by virtue of its interim examinership.

There is an entire post devoted to the Pierse examinership on here and one of the most puzzling aspects about the examinership, the prominence of a single €16m debt owed to Pierse by fellow NAMA-developer Gerry Gannon in the context of debts over €300m owed by Pierse, has emerged this morning as the judge questioned why there had been little reference in the examinership to an intercompany debt owed to Pierse of some €70m.

The judge, the redoubtable Mr Justice Peter Kelly, has also questioned, according to the Irish Times, the estimated deficit of €200m in a liquidation and is now seeking to discover if the company has traded whilst being insolvent, something that might have ramifications for the company’s directors. There appears to be some confusion over related party loans which may also have serious consequences.

The hearing will resume at 2pm today. Pierse has some 211 employees (down from a peak of 700 and the 300 claimed on the company’s website) and a wide network of contractors and was reported to be expecting turnover of €100m in the 12 months to April 2011. It has suffered from the downturn in construction, particularly in the public sector. This entry will be updated as the case continues today.

UPDATE: 4th November, 2010. RTE is reporting that Judge Kelly has agreed to the appointment of a liquidator to the group and has ordered that certain allegations about the company’s lending and solvency be investigated during the liquidation process. The company has been at the receiving end today of some sharp criticism by the judge. The company’s employees are put at 109 by RTE and the company owes what is described as “colossal sums” to creditors (previously reported at €310m). As WSTT says below in the comments there are likely to be knock-on effects from this company’s demise.

UPDATE: 4th November, 2010. There have been a few enquiries via the contact form about the situation of employees in Pierse following the events today. Citizens Information set out some information as to your rights as employees in a liquidation.

UPDATE: 5th November, 2010. The Irish Times carries perhaps the better reporting on yesterday’s events. Simon Coyle of Mazaars has been appointed liquidator of Pierse Contracting and Pierse Building Services. The barrister representing Pierse yesterday, Rossa Fanning SC, is reported to have told the court that the company owed 2-3,000 unsecured creditors a total of nearly €52m and that they would be unlikely to see any payment in a liquidation. Whilst the directors of Pierse were painted in a glowing light just one month ago with claims that they had put their own money into the company and hadn’t buried their heads and had cut costs to the bone, there were some dark suggestions yesterday about the company’s activities and Judge Kelly has ordered these activities to be investigated in the liquidation. The Irish Examiner meantime provides a listing of the directors of the two companies in liquidation as follows : “The directors of Pierse Contracting are Fearghal O’Nolan, Ti Aisling, Brighton Road, Foxrock; Charles Norbert O’Reilly, Mount Prospect, The Court, Brennanstown Vale, Foxrock; Gerard Thomas Pierse, Villa Christina, Torca Road, Dalkey, Kieran Duggan, Foxrock Manor, Leopardstown, Dublin and Martin Murphy, Porterstown, Ratoath, Co Meath.” and “The directors of Pierse Building Services are Mr O’Nolan, Mr O’Reilly and Adrian Burke, Portersgate Court, Clonsilla, Dublin.”

UPDATE: 6th November, 2010. The fall-out from the collapse of Pierse continues with the Irish Times today reporting that contractors and subcontractors that worked with Pierse may now fold as a result of their debts with Pierse going bad. It is reported that Pierse has €51m of unsecured creditors, mostly subcontractors and they are likely to get nothing from the liquidation whilst the secured creditor Bank of Ireland may secure a large part of its debt.  In addition to threatening the survival of other companies, Pierse’s liquidation will also delay the completion of a major waterworks scheme in south Dublin – the €48 million Boherboy Water Services Scheme which is 90 per cent complete and was due to be finished in the first quarter of next year.

UPDATE: 8th November, 2010. Neil Callanan at the Sunday Tribune has apparently seen the schedule of works that Pierse was involved in until recently and it includes a €38.2m office complex for Wexford County Council, a €30.4m water supply plant for South Dublin County Council,  a €12.6m water supply scheme for Dun Laoghaire Rathdown County Council, a €52m contract to develop four schools due to be completed in December 2011 and a €55.7m contract for a motorway service station project.

UPDATE: 26th November, 2010. The annual accounts for Pierse Contracting have been published which cover the year to April 2010. The Irish Times reports that turnover fell from €328m in 2009 to €207m in 2010 and indeed Pierse appeared to be forecasting revenue for the year to April 2011 at €100m. There were some €75m of intercompany loans, that is that Pierse lent money to a group companies including €40m to  Redmayne “owned by Pierse Contracting directors and some members of their families” and it is now suggested that these intercompany loans will not be repaid.

UPDATE: 29th November, 2010. The Irish Times reports that two banks owed money by Pierse have successfully appointed receivers to the businesses –  Bank of Ireland (owed about €35m and appointed David Carson, corporate recovery partner with accountancy firm Deloitte as receiver) and Bank of Scotland (owed an estimated €15m and appointed David Hughes and Luke Charleton of  Ernst and Young as receiver).

UPDATE: 27th June, 2011. The Sunday Business Post reports that the liquidator has submitted his report to the Office of the Director of Corporate Enforecement. The report was ordered by Judge Kelly who expressed concerns about the operation and finances of the company. Elsewhere there is to be an auction of Pierse office and miscellaneous equipment on Wednesday this week 29th June – details here. There’s not a great deal of detail provided and the auction excludes heavy equipment which was reportedly auction earlier in the year but the photographs paint a sad picture of what remains of a once-great company.