Contractor working on hundreds of council housing enters scrutiny

Contractor working on hundreds of council housing enters scrutiny

The High Court has appointed an interim inspector for a developer building more than 360 public housing units in five different locations across the state.

Blacklough Construction Limited has filed for legal protection from its creditors as it is insolvent on a cash flow basis and unable to pay its debts.

Blacklough works on developments for the Respond Housing Association in Carrickmines, Co Dublin, on Malahide Road Dublin, in Navan, Co Meath, in Mullingar, Co Westmeath, and in Dundalk, Co Louth.

The court heard that despite its current predicament, an independent expert found that the company had a reasonable chance of survival if certain steps were taken, including the appointment of an auditor who would attempt to negotiate a survival plan with its creditors.

Blacklough’s solicitor, Ross Gorman BL, said the company’s difficulties were largely caused by an unprecedented 33 per cent increase in building material costs since 2020.

In addition, a potential planning permission issue has arisen for the Carrickmines development, the attorney added.

On Thursday in the High Court, Judge Michael Quinn said he was happy to appoint chartered accountant and insolvency expert Joe Walsh as interim auditor for the company.

The company employs 48 people and also uses subcontractors.

Blacklough applied to the court to appoint an examiner, who he claims could prepare a plan of settlement with the company’s creditors. If approved by the court, this scenario would allow the company to survive.

The company has a registered address in Rathcoole, Co. Dublin and its sole director is Tara King of Naas, Co. Kildare.

Her father, Gerard Walsh, is a company secretary and has extensive experience in the construction industry.

The court also heard the examiner will deal with the company’s employees, subcontractors and commercial creditors, to whom the company owes over €3 million.

Independent expert Cormac Mohan, in his report on the company, found that if the auditor were successful, creditors would fare better than if the company went into liquidation.

Seeking the appointment of an auditor, Mr Gorman said the company was founded in 2010 and had had success building residential units. It was profitable until recently, he added.

The company is currently constructing 363 units at five different locations, which will be the subject of fixed price contracts.

The total contract price for the five sites where Blacklough works is 65 million euros. To date, the company has completed works worth EUR 31 million.

The significant increase in raw materials for the construction industry has caused the company to suffer losses, the lawyer said.

It is estimated that the increase in costs due to factors such as Covid-19, Brexit and the war in Ukraine has caused the company to suffer losses of around 1.7 million euros, the lawyer added.

Mr Gorman said the firm’s main customer has agreed to a price increase. However, the money received was not enough to repair all of Blacklough’s losses.

It is building the units for the housing association Respond, which is supporting the application for examination, the attorney said.

There’s another problem at the Carrickmines site, where about 48 homes have been built to roof level, he said.

However, the company that hired Blacklough to carry out the work has been informed by Dún Laoghaire Rathdown County Council that there are “significant difficulties” with the site as to the exact site where the new properties will be built.

The question arose as to whether the location of the new development corresponded with the building permit that had been granted. The solicitor said Blacklough had informed his insurer of the matter.

Blacklough’s financial situation has kept “skeleton crews” on construction sites while suppliers and creditors have been demanding payment, Mr Gorman said.

Subjecting the company to the auditors will help resolve the situation and secure new investments, the court said. The lawyer said one party is interested in investing in the company.

Mr Justice Quinn said he was pleased to appoint Mr Walsh as Interim Auditor.

He ordered the company to notify its creditors of the filing and adjourned the case to later this month.

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