Construction company building hundreds of social housing units enters review

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An interim examiner has been appointed by the High Court for a construction company which is currently building more than 360 social housing units at five different sites in Ireland.

Blacklough Construction Limited has sought court protection from its creditors because it is insolvent on a cash flow basis and unable to pay its debts.

Blacklough is currently working on developments for Respond Housing Association Carrickmines, Co Dublin, Channel College, Malahide Road Dublin, Athboy Road Navan Co Meath, Charlestown Mullingar Co Westmeath, Dublin and Dundalk, Co Louth.

Costs of building materials

The court heard that despite its current predicament, an independent expert report said the company had a reasonable prospect of survival if certain steps were taken, including the appointment of a reviewer who would seek to agree a survival plan with the company’s creditors.

Blacklough lawyer Ross Gorman Bl said the company’s difficulties were largely caused by the unprecedented 33% rise in the cost of building materials the industry has seen since 2020.

In addition, a potential planning permission issue has arisen over the development the company is working on in Carrickmines, the solicitor added.

In the High Court on Thursday, Judge Michael Quinn said he was pleased to appoint accountant and insolvency expert Joe Walsh as the company’s interim reviewer.

The company has 48 employees and also uses the services of subcontractors.

Employees due

The company has asked the court to appoint a screener, who it says can put in place a plan of settlement with the company’s creditors, which, if approved by the court, would help the company survive.

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

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

The court also heard that the examiner would also deal with the company’s employees, contractors and its trade creditors, who the court heard owed more than 3 million euros.

Independent expert Cormac Mohan had said in his report on the company that creditors would do better if the review was successful than if the company went into liquidation.

Seeking the appointment of a reviewer, Mr Gorman said the company was established in 2010, had successfully built residential units and had been profitable until recently.

Package contracts

The company is currently building 363 units on five different sites which are subject to fixed price contracts.

The total contract price for Blacklough’s five sites is currently €65 million and to date the company has completed work worth €31 million.

The significant increase in raw materials for the construction sectors has led to losses for the company, the lawyer said.

It was estimated that rising costs, due to factors such as Covid-19, Brexit and the war in Ukraine, meant the business suffered losses of around €1.7m this year , said the lawyer.

The lawyer said the company’s main client agreed to a price increase, but the sums he received were not enough to meet all of Blacklough’s losses.

He is building the units for the housing association Respond, which the lawyer says supports the reviewer application, the lawyer said.

The lawyer said there was an additional problem at the Carrickmines site, where he said some 48 flats had been built up to roof level.

Building permit

However, the solicitor said the entity which engaged Blacklough to carry out the work has been advised by Dun Laoghaire Rathdown Co Council that there is “significant difficulty” with the site, relating to the precise location where the new properties were built.

There was a question about whether the location of the new development complied with the planning permission granted for the site.

The lawyer said Blacklough informed his insurer about it.

Due to his financial situation, the lawyer said his client had “short crews” at the sites.

Suppliers and creditors had also made requests for added payment lawyers.

The lawyer said placing the company under review would help resolve this situation and seek new investment.

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The lawyer said a party wanted to invest in the business.

Justice Quinn said he was pleased to appoint Mr. Walsh as acting reviewer,

He ordered that the company’s creditors be notified of the request and adjourned the proceedings until later this month.

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