Irish construction firm Sammon Group, owed €8m by Carillion, has applied for protection from its creditors as it tries to put together a turnaround plan.
Sammon was working as the main contractor for Carillion on six schools in Ireland when the contracting giant collapsed on 15 January.
According to reports in the Irish Times, the firm – which reported turnover of €72m (£63m) in 2016 – was owed around €8m (£7m) for work carried out in October, November and December last year.
On Thursday the High Court in Ireland granted the company protection from creditors’ claims as it called in Grant Thornton to start working on a turnaround plan – an action called examinership.
The counsel for Sammon told the court Carillion’s collapse had “contaminated the entire group and the other projects it is working”, and one creditor had applied to have a Sammon subsidiary wound up.
Sammon chief executive Miceál Sammon said: “Sammon will continue to trade as usual during the period of examinership which is intended to ensure that we can work our way out of current difficulties.
”We are very grateful for the patience and understanding of our creditors, clients and employees as we set about our business recovery programme.”
He added: ”We are very grateful for the patience and understanding of our creditors, clients and employees as we set about our business recovery programme.”
Grant Thornton partner Michael McAteer has been appointed as interim examiner.
If this appointment is confirmed by the High Court in a hearing on 16 April, then Mr McAteer will have 70 days to develop a turnaround plan for the company.
Sammon had been contracted to build the schools in 2016 by Inspired Spaces, a 50:50 joint venture between Carillion and the Dutch Infrastructure Fund (DIF).
Sammon claimed the contract to build the schools was worth €87m (£76m), but the monthly payments for work ended in December 2017, meaning it could not pay its subcontractors and suppliers.
When Carillion collapsed Sammon approached the remaining stakeholders and agreed a deal in principle to continue work. But this was later rejected and Sammon was told to leave the sites.
The remaining partner in Inspired Spaces, DIF, is now tendering for a firm to complete the work.
Sammon Group and Grant Thornton have been contacted for comment.
Examinership is a process under Irish law where a company in financial difficulty can apply for protection from its creditors while it tries to turn around its finances.
A case, supported by an independent accountant, is made to the High Court, and if a judge believes the firm has a realistic prospect of survival, then an examiner is appointed.
This examiner then has 70 days to come up with a turnaround plan, called a ‘Scheme of Arrangement’, which must be approved by at least one creditor.
This proposal usually involves an investor injecting more funds that will be paid in dividends to creditors.
If the court decides the proposal is fair to the creditors it will confirm it and make the turnaround plan binding on the company and the creditors.