Relief in Portlaoise as new €13 million schools narrowly escaped building firm collapse

Portlaoise Parish Priest says any outstanding work will have to be retendered

Conor Ganly & Court Reporter

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Conor Ganly & Court Reporter

Relief in Portlaoise as new €13 million  schools narrowly escaped building firm collapse

Locals attending the recent Holy Family Open Day in Portlaoise. Pic: Tim Keane

Portlaoise has had a lucky escape following the collapse of a big construction company that built the new €13 million Holy Family Schools, according the the town's parish priest.

Msgr John Byrne, also the chairman of the Holy Family Junior and Senior Schools Board of Management, is however expecting that outstanding work such as the stag list will have to go into a new tender following the collapse of Sammon Construction.

The company was placed into liquidation today by the High Court after examiners failed to put the firm back on an even keel. Sammon was plunged into crisis earlier this year after the collapse of Carrillion in the UK.

The Co Kildare based group employs approximately 200 people directly and many more subcontractors indirectly.  

Msgr Byrne extended his sympathy to the 'many fine people' who would lose their jobs. He said some of the tradespeople would have worked on the Holy Family schools which opened last September.

The schools opened in Septermber 2017 after a year's delay. The schools were not complete on opening day. The main part of the project that was not finished was the sports hall. 

Reacting to Sammon's collapse, Msgr Byrne told the Leinster Express that the schools are substantially complete but the snag list has not bee fully cleared. There is also an issue of an guarantee period for work carried out.

"It is my understanding that all the obligations will have to be put together in a bundle and go out to tender," he said.

He expects that this will be a standalone contract not linked to other schools. He expects the costs will be covered by funds that Department of Education has retained.

He said some work was carried out after the examiner's were appointed but very little has been completed in the past fortnight.

Speaking ahead of the official opening of the campus this week, he said Portlaoise has narrowly avoided a situation which could have seen work stop completely as has happened on other Sammon school projects.

Even as recently as three months ago, just before Sammon went into examinership, the sports hall had not been handed over.

"I really am glad we got over the finish line...It was a saga," he said.

In April three Sammon companies within the group, which got into difficulty over the devastating collapse of UK construction giant Carillion, entered into examinership.

The High Court was told today, June 5, that the examiner Mr Michael McAteer is no longer able to continue with the examinership process for two of those companies Sammon Contracting Ireland Ltd and Sammon Contracting Group Ltd.

The group, which was owed some €8m by Carillion, was part a significant joint venture with the UK firm and a Dutch Infrastructure Fund (DIFCO) to build five schools and Institute of Further Education.  

Work on that contract, known as the SB 5 contract ceased following Carillion's collapse earlier this year. 

The matter came before Mr Justice Robert Haughton at the High Court on Tuesday, who following an application by the examiner Mr Michael McAteer made orders winding up Sammon Contracting Ireland and Sammon Contracting Group.

In a sworn statement Mr McAteer said he was unable to formulate proposals for a scheme of arrangement that if approved by the High Court would allow the companies to survive. 

He said that getting works restarted on the SB5 contract, by securing the tender to recommence those works, was the key to ensuring the construction firm's survival and return to profitability. 

Mr McAteer said that he talks with key stakeholders including the banks.  

He said that following a communication with DIFCO no decision has been made to award the contract to finish off the SB5 project.

This delay he said has undermined confidence in Sammon and has made it more difficult to attract investment. 

Other monies Sammon are owed have not been paid he said. 

Terminations notices have been served on Sammon in relation to two other projects it had been involved with, Mr McAteer added. 

As a result, Mr McAteer said Sammon lacks funds to meet its liabilities to Revenue and he could not continue with the examinership. 

Mr Stephen Tennant, also of Grant Thornton, will act as liquidator to the two companies. 

When the company applied for an examiner the court heard that SCIL had a deficit of €11m as a going concern. 

However, in the event of it being wound up that deficit increases to €21m.  

Mr McAteer will continue to act as examiner for a third company within the group Miceal Sammon Woodcraft Ltd, which has 22 employees. 

A creditors meeting in respect of that firm is due to take place in respect of that firm later this month. 

The Sammon group had been building schools in Carlow, Kells, Co Meath, Wexford and two in Bray Co Wicklow.

Other separate projects the group had been working on include the Maynooth Educational Campus. projects in Cork, Shannon Airport, Waterford and Dublin.

When seeking the appointment of an examiner 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 €87m 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 £1.5Bn has had "a devastating and immediate impact" on the companies, counsel said.

Payments from the SPV to the Sammon companies ceased last December, counsel said adding it was owed €8m by the SPV.

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

The impact of Carillion had contaminated the group's other projects, the court also heard.