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High Court

Collapse of Carillion pushes building contractor Sammon into examinership

Carillion went bust in early January, as a result of debts of over £1.5 billion.

THE HIGH COURT has appointed an interim examiner to an Irish building contractor which has got into financial difficulties due to the “devastating collapse” of the one of the UK’s largest construction firms Carillion.

At the High Court this afternoon, Justice Robert Haughton appointed Michael McAteer of Grant Thornton Ireland to the Co Kildare-based Sammon Contracting Group and related companies Sammon Contracting Ireland Ltd and Miceál Sammon Woodcraft Ltd.

The Judge said while the firms were insolvent he was satisfied to appoint McAteer on the basis an independent expert’s report had stated the companies have a reasonable prospect of surviving if certain steps are taken.

These steps include the examiner putting together an agreement scheme of arrangement with the group’s creditors.

If that scheme is approved by the High Court it will allow the group to continue to trade as a going concern.

Carillion projects

The group, which employs more than 216 people, was hired by an entity that included Carillion to build several education facilities in Ireland.

These include the construction of Tyndall College Campus in Carlow, Eureka Secondary School in Kells, Co Meath, Loreto College in Wexford, and Coláiste Ráithín and St Philomena’s National School which are both in Bray, Co Wicklow.

Other separate projects the group is working on include the Maynooth Educational Campus, which the court heard is the largest school contract in the history of the State.

It is also working on a school in Cork, a building for Shannon Airport Authority, and housing developments in Waterford and Dublin.

Seeking McAteer’s appointment, barrister Ross Gorman Bl for the group said it was hired to build five schools and the institute for education by an SPV that included Carillion known as Inspired Spaces.

That contract was worth approximately €87 million to the group, counsel said. His client was paid on a monthly basis after works commenced in 2016.

However, the collapse of Carillion with debts of over £1.5 billion has had “a devastating and immediate impact” on the companies, counsel said.

Payment difficulties

Payments from the SPV to the Sammon companies ceased last December, counsel said.

As a result, the group has been unable to pay its suppliers and subcontractors working on those projects.

Counsel said that in addition, the fallout from Carillion’s collapse in January had “contaminated the entire group and the other projects it is working”.

The subcontractors and suppliers have made demands for payment, and one creditor has applied to have one of the firms in the group wound up, counsel said.

In addition, there has been no activity on any of the sites where the company had been carrying out works on behalf of the SPV involving Carrillion.

However, it is confident that if an examiner is appointed, and a scheme approved, the group will be in a position to complete its contracts on time and return to profitability.

The group has also had discussions with PJ and Mary McGrath of the McGrath Group, which has indicated it will provide support and funding to the Sammon firms during the period of protection.

Counsel said that going forward the group, which has a good record, is also confident that it will obtain contracts for school and residential projects in the future.

After appointing McAteer as an interim examiner, the Judge adjourned the matter to 16 April.

The Judge also directed that the group’s main creditors and Revenue be put on notice of the hearing.

Comments are off as legal proceedings are ongoing

Aodhan O Faolain