A syndicate of three banks owed €114.5m by McInerney Homes has told the High Court it will not fund the company into the future.
Opposing a petition for the appointment of an examiner, lawyers for Bank of Ireland, KBC and Anglo Irish Bank said the rescue plan for the company would not succeed and would not have the banks' support.
Barrister Rossa Fanning said the matter should end there, as an independent assessment said the support of the banks was crucial. He said an examinership process - which would give the company court protection from creditors - would be the worst of both worlds for the banks.
He said their debt would be slashed and they would be tied involuntarily to the fortunes of a group of companies. To do so on a non-consensual basis was legally impossible, he submitted. A suggestion that the company could source a debt elsewhere and take out the banks was simply not credible, he said.
Mr Fanning said the rights of a secured creditor should 'not be sacrificed on the altar of the preservation of an enterprise that is grossly insolvent'. The company's projections for the future were 'clearly flawed and entirely speculative' he said. Mr Justice Frank Clarke will give his decision on Monday.
McInerney 'shocked' by banks' action
Earlier, lawyers for McInerney Homes told the court that the implications of a possible collapse of the company could go much further than its 100 employees.
The court was urged to confirm the appointment of an examiner after hearing that the home building firm had a reasonable prospect of survival.
Senior counsel John Hennessy said the management of the company was shocked and surprised when the banks decided to withdraw funding and cancel its overdraft last month.
He said the decision was made 'literally overnight' and may have been influenced by NAMA.
The company's loans have not yet been transferred to NAMA but could be in the coming months, he said.
Mr Hennessy told Mr Justice Frank Clarke that the 100-year-old company was 'an ideal candidate' for examinership.
He said there was a business plan in place with independent approval, and an investor willing to invest. It was, he said, a business waiting to take off again.
He added there was no sense that the company had been mismanaged. It had not engaged in speculative development, had operated a conservative business model and re-invested profits over the years. However, the driver of the group's difficulty was the property crash.
The business plan presented to the court predicts zero growth in house prices for the first two years followed by 2%, 3% and 5% in the following three years. The opposing banks have described the company's projections as optimistic.
However, Mr Hennessy said it was difficult to see the commercial reasoning behind the banks' position. He said the banks were proposing to recoup their money through receivership but would not come out with any more than they would under the company's rescue plan.
'The question now for the court is do you get rid of a 100-year-old business, destroy jobs and a business serving the community because the banks would prefer to get their money through receivership', he said.
