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Ireland:firms Are Running Out Of Options As Creditors Come Calling

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Firms are running out of options as creditors come calling

Independent.ie

Sunday August 02 2009

The economic malaise has moved on from the property sector and the examiners and receivers are now being called in for a wide range of companies

THE financial woes of Liam Carroll are certainly daunting, but the property developer is only one in a long line of businessmen crippled by debt.

As the economy continues to plummet, Irish firms are in increasing trouble with ever-growing numbers going to the wall or having to apply to the courts for protection.

The number of voluntary and High Court liquidations, receiverships and examinerships increased a staggering 135 per cent in the first six months of 2009, and there are no signs that it is evening out, according to figures from accountants Farrell Grant Sparks (FGS).

Indeed, the only booming business in town is insolvency. In just the first half of this year, some 733 companies faced insolvency, compared with 312 in 2008, which was itself a bad year. FGS estimates that there may be as many as 1,600 company failures altogether this year, compared with just 177 in 2007.

Such is the demand that former Allied Irish Banks director Bernard Somers stepped down from the board of AIB to avoid conflicts of interest arising from his day job as head of the corporate restructuring firm Somers & Associates.

Construction and engineering firms were among the first to feel the chill winds and over 250 firms -- or a third of the total -- have been in trouble this year. This is more than double the number last year.

Now the trouble has moved on from property and we will see much larger companies failing over the coming months, says Kieran Wallace, the partner in charge of restructuring at KPMG.

The first preference for many companies where debts are high and cashflow low is to save the company, which means an examinership or informal scheme of arrangement.

Examinership can be an expensive process when you take into account High Court rates and time. The minimum is about €35,000; while at the upper end, the sky is the limit. Yet some 58 companies had examiners appointed to them in the first six months of 2009 as opposed to 16 in the same period in 2008.

Recent cases include the Thomas Read Group -- which was founded by the hotelier Hugh O'Regan. (O'Regan himself last Sunday sought the protection of the High Court for three of his companies after Anglo Irish Bank attempted to seize control of a number of properties connected to him and his companies. This protection was granted by the High Court last Thursday.) The Thomas Read Group was placed under High Court protection in November 2008 when it went into interim examinership. Property developer Simon Kelly was a director of Sharmane Ltd, the principal trading company in the group. The examiner was later discharged and a receiver was appointed last March.

An examiner was also recently appointed to the developers, Laragan Developments. Some of those owed money by Laragan included property buyers who paid deposits on apartments.

Another property-related restructuring is O'Briens Sandwich Bars, whose head office in the Republic has also been placed in examinership. O'Briens' founder and chairman Brody Sweeney said the action was an effort to restructure the business and to protect jobs.

Celebrity restaurant Town Bar and Grill in Dublin's Kildare Street was placed into examinership earlier this summer -- but it got a lifeline after an unnamed investor agreed to put €500,000 into the business.

An interim examiner has also been appointed to three well-known Dublin car-hire companies: Murrays Rent A Car, Murrays Leasing and Murrays Chauffeur. In late July, an interim examiner was also appointed to the company which publishes the Buy and Sell advertising paper.

Of course, many companies in trouble would prefer an alternative to examinership and so would opt for a Section 201 application to the courts. A Section 201 requires agreement from 75 per cent of creditors on an amount to be paid back. According to one senior legal source: "If you have up to about six or so creditors, it can work; but where you have 50 to 100 creditors, it is practically impossible."

Barry Donohue of KPMG is a proponent of Section 279 which he says has both personal and economic advantages over a receivership. It is an extremely private arrangement, which can allow a new company to be set up -- and is also far cheaper as it is not court- led. Again it needs agreement from 75 per cent of the creditors, both in number and in value.

The key for many directors is avoiding receivership, which is where the company is effectively wound up, and creditors receive nothing. Nonetheless, some 79 receivers were appointed in the first six months of 2009 compared with a mere 23 in the same period in 2008.

If a bank does appoint a receiver, a company has three days to get an examiner in. Banks can be slow to appoint receivers -- though some foreign-owned banks are less reluctant.

"The Irish banks will step back and only resort to a receiver as a last resort as they do not want to see headlines that they're responsible for job losses," says one receiver.

However, some companies bite the bullet and ask their banks to step in. Newcourt, an Irish services group listed on the stock market, last month invited Bank of Ireland to appoint a receiver over the group. Other businesses fearful of trading while insolvent, such as Walsh Family Foods, also requested that the bank appoint a receiver.

The Paul McGinley-designed golf course, the Macreddin, also went into receivership last month.

Apart from companies, individuals have also been facing big problems with personal guarantees. Personal guarantees called in by the banks to developers and land speculators such as Liam Carroll, Paddy Kelly and Tom McFeely have been enforced in the commercial court as property developers signed unlimited personal guarantees offering their personal property as security for commercial debt.

Increasing numbers of ordinary investors are also in trouble, having been caught up in the property frenzy. And with the legislation for the State's bad bank, Nama, just published last week, more of us could be about to line up behind Carroll.

http://www.independent.ie/business/irish/f...ng-1849289.html

It's going to be a bloodbath over there.

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Intriguing decision coming up in Ireland on the NAMA rate paid by the state for bad debts.

VI interests say 80c on the €, credit haters say 40c.

Press is full of credit haters at the moment, opting for the latter figure. Last year they were all swooning over real estate. Amazing what a collapse in property-section advertising can do!

Intriguing because the decision may influence other bailouts in small € countries.

I'm hoping for the 40c - then the Irish can spend 6 months agonising over how well the UK is doing before jumping for joy when £ collapses. It's all relative!

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Intriguing decision coming up in Ireland on the NAMA rate paid by the state for bad debts.

VI interests say 80c on the €, credit haters say 40c.

Press is full of credit haters at the moment, opting for the latter figure. Last year they were all swooning over real estate. Amazing what a collapse in property-section advertising can do!

Intriguing because the decision may influence other bailouts in small € countries.

I'm hoping for the 40c - then the Irish can spend 6 months agonising over how well the UK is doing before jumping for joy when £ collapses. It's all relative!

Just read this:

‘If one falls, the rest topple’

Sunday business post

Sunday, August 02, 2009

Twenty-four hours is a long time for a country in the grip of a property-fuelled recession. Last Thursday, the government finally unveiled the details of its grand Nama masterplan, a strategy designed to remove €90 billion of toxic property assets off the balance sheets of the banks and get them lending again.

The next day, the government learned just how toxic those assets were. Property developer Liam Carroll failed last Friday afternoon to have an examiner appointed to six companies in his Zoe Group. The High Court ruled his companies were insolvent and had no hope of survival.

Unless the verdict is overturned by the Supreme Court on Tuesday, it will result in all his banks rushing to appoint receivers over his various assets in an effort to shore up their balance sheets.

The decision is a body blow to Nama. This is exactly the sort of scenario that the agency was established to avoid............

http://www.sbpost.ie/post/pages/p/story.as...3510-qqqx=1.asp

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Going on appeal to the Supreme Court. Another intriguing decision.

That developer was under contract to build the new HQ for Anglo-Irish Bank, the greatest pervert in the credit scam and now nationalised by the Irish government.

The developer's submission to the court on its viability included drawing down a credit line from Anglo-Irish of €8m in order to complete the HQ project! :blink: The usual wheels within wheels ******** of Irish deals.

Judge's computer said NO! He said he realised that refusing examinership and letting the liquidation play out ran the risk of collapsing the house of cards of Irish property values - but the law is the law.

Funny, that - a judge applying the law. And he's been recognised for years as an excellent judge.

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So it all happens on Tuesday for Ireland.

I find it amazing how long the western governments have managed to keep this house of cards from collapsing. It shows how surprisingly easy it is to rig the whole system, if only temporarily.

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We're looking at a YES vote in the EU referendum, take 2, aren't we?

At least they get to vote for their own destiny.....

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NAMA is also buying up Irish owned assets in SE England.

This means that potentially billions in property will be under the control of the Irish govt.

The UK treasury sent a team to Ireland to ensure that NAMA was not planning to offload property to settle debts - they were worried that this could crash the UK property market too.

Watch this space....

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I can't help but think there are an awful lot of people taking the opportunity to wipe out their debts.

The money lent out has not just disappeared. Someone has it. Who?

a debt is not money. only banksters think that it is.

thats why the system blew up when the "wealth" wasnt coming their way.

going bust is totally the only weapon the public has against banks...a sort of suicide bomb.

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NAMA is also buying up Irish owned assets in SE England.

This means that potentially billions in property will be under the control of the Irish govt.

The UK treasury sent a team to Ireland to ensure that NAMA was not planning to offload property to settle debts - they were worried that this could crash the UK property market too.

Watch this space....

Indeed. This could be one to watch, looks like the Treasury is (if its correct - any link on this?)

I would not have thought it was normal for the UK to send a Treasury team over to a foreign country in these circumstances unless they were worried about something.

An Irish fire-sale of Commercial Property would cause a big hit in London and much of the BTL bubble in the UK was financed by Irish investors

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surely the No vote will be stronger this time

given that the artificial low interest rates are the main cause of their problems

Yes, if people were to think about it. But they won't.... they'll feel compelled to run for safety, that 'safety' being big brutha EUSSR.

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So it all happens on Tuesday for Ireland.

I find it amazing how long the western governments have managed to keep this house of cards from collapsing. It shows how surprisingly easy it is to rig the whole system, if only temporarily.

Any news on this yet?

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