The High Court has appointed joint provisional liquidators to a mechanical engineering company that designed and built heating and environmental services for the construction sector.
The winding-up order was made in respect of LMC MEP Ltd which the court heard got into difficulties caused by the Covid-19 pandemic and the extraordinary price inflation in construction materials. The company claims that some of its suppliers have engaged in “excessive profit taking”.
The court heard the company has a negative net asset position of more than €6.66 million. It owes over €3.5 million to its trade suppliers. Revenue is among its creditors, and it owes debts to other entities within the group of companies it belongs to which it cannot pay.
The court heard it entered into a €10 million contract with BAM to provide services as part of the construction of a hotel and 412 apartments in Newmarket Square, Dublin 8. However, it says inflation pressures have added €1 million to its costs and now the contract is “disastrously loss-making”.
The company also claims two significant construction projects in Cork, valued at over €7.1 million to the firm, planned for 2022 have been delayed due to legal actions.
The delays to the proposed construction of hundreds of apartments have delayed the commencement of the projects to well into 2023 at the earliest, the firm claims. The delays, it is claimed, have seriously eroded the company’s capacity to trade through the current cash flow problems. It sought to bring in fresh investment in exchange for equity within the group, but last month the proposed investor withdrew from a deal.
The firm, which was part of a group of linked entities, employed over 40 people and traded profitably from many years.
The group’s customers included An Post, the Health Service Executive and the Irish Prison Service, as well as acting as subcontractors to major building firms.
At the High Court on Tuesday, Mr Justice Brian O’Moore said he was satisfied to appoint provisional liquidators of the company, which has a registered address at the Courtyard, Kilcarbery Park, Nangor Road, Dublin 22.
The judge appointed chartered accountants and insolvency experts Colin Gaynor and Michael Leydon as joint provisional liquidators. The firm’s directors, Martin Lydon and Stephen McConnell, petitioned the court for the appointment of the liquidators, to ensure an orderly wind-up of the company, claiming the move was in the best interests of the company’s creditors and employees. There were concerns expressed that some creditors may take matters into their own hands and seize company assets.
In light of those specific pieces of evidence about the threats to the assets of the company which emerge from disappointed creditors, the judge said the joint provisional liquidators should be appointed.
