Some of the country’s best credit managers were left reeling last week following the sudden liquidation of Precision Electric (Ireland) Limited (“the Company”).
The last audited accounts filed for the company for the year ended 31 July 2015 showed net assets of €3.3 million. Given that the Company had traded successfully for some 48 years and had such a strong balance sheet the sudden liquidation shocked many creditors and their professional advisors.
One major creditor, who was owed over €200,000 and who had traded with the Company for decades told the creditors meeting that he would have supported a recovery plan but was not consulted about the Company’s difficulties. Many other creditors echoed similar sentiments. Given that just 10 creditors represented 50% of the unsecured creditors of €3.2 million, obtaining approval for an Examinership could have been straightforward.
It was a creditors meeting that left many creditors and their professional advisors (myself included) frustrated with the lack of information provided by the chairman.
Given that the Company was a sub contractor in the construction industry, much of its work in progress will, in my view, not be collectible in a liquidation..
A successful recovery plan or Examinership could also have saved the taxpayer €987,000 in employees wages and redundancy claims.
It appears that the Company’s directors did not fully appreciate the support that they would have received from creditors for either an orderly wind down or an Examinership. The lesson to be learnt is that creditors will generally be supportive of a recovery plan, as opposed to a liquidation that will destroy the value of assets, and that such recovery plans should be considered before taking the terminal decision to place a company into liquidation.
Having said the above, chairing a creditors meeting is a very stressful, and perhaps the Chairman was simply unable to properly explain the reasons why the Company had to go into liquidation.