Top luxury developer forced into liquidation

DonJose

I'm a bear but I never thought things would get as bad as they are now :eek:

Top luxury developer forced into liquidation

"KILROE Developments Ltd, which built luxury homes for Ryanair's Michael O'Leary, Johnny Ronan of Treasury Holdings and Adam Clayton of U2, has gone into liquidation owing €3.8m to more than 300 firms and individual contractors.

It is the most prominent of three contractors and developers to collapse last week.

Kilroe Developments, which was founded in 1997, was a potent symbol of the building boom during the last decade with a wide range of blue chip clients.

The company now owes the taxman more than €786,000, including €241,000 in VAT and €162,000 in PAYE and PRSI contributions.

Staff are also owed €214,000, including wages, redundancy and money in lieu of notice.

At a sometimes stormy meeting of creditors held at the Marriot Johnstown House Hotel in Enfield, creditor after creditor claimed they are owed between 30 and 40 per cent more than the figures noted in a list of unsecured creditors supplied by the developer."

http://www.independent.ie/national-news/top-luxury--developer-forced-into-liquidation-1393785.html

Karoma

This must obviously be a sign of troubled times, nothing else, not even the tiniest thoughts of mismanagement should be entertained.



Ed: rabble.

orbital83

Karoma - I'd say you'd struggle to find many development companies set up during the boom years that had rigorous risk management and project appraisal procedures. Most of these guys are leveraged to the hilt and work under the mantra that "Ireland is different". They never stress-tested their business for a negative change in conditions. Never mind a quadruple whammy of high currency, increasing interest rates, rising unemployment and a credit crunch.

The sad thing about these stories is that people are losing jobs, and the companies owed money may in turn go out of business.
All for the lack of two basic principles of Junior Cert Business Studies:
(i) the key to survival in business is to shift your stock and have cash turnover
(ii) if stock is not selling, the price should be reduced to such a level where it does sell.

Developers appear to be waiting on a glorious day when we all wake up to find the tiger is back and prices are jumping at double digit rates. This is not going to happen any time soon, and for every day we wait on that glorious moment, interest accumulates and the creditors get more worried.
The reality is, if developers don't cut prices to market levels, a lot of their asses will end up in the bacon slicer over the coming year... and their properties may well end up being flogged by a liquidator at their true value.

Hopefully, if this message gets out to developers, we can avoid having too many more Finns and Kilroes.

DublinDilbert

DonJose wrote: »

I'm a bear but I never thought things would get as bad as they are now :eek:

This could just be the tip of the ice-berg.... who knows how many of this companies suppliers will be pushed under also...

It going to be interesting to see when stock starts to be liquidated by a liquidator what bargains there might be out there and if anyone will take them up on it!

It seems to be a massive glut of apartments out there, I guess you never just build a few apartments, you can't build 1/2 a block and sell them, then build the other 1/2... where as with houses you can build 1/2 an estate, then build the other 1/2 next year etc....

BigglesMcGee

ahhh, hide the money and screw all your creditors, staff and clients. I bet the directors are still rich though. Scumbags.

I would think there will be some more of this. Most of these guys were only it it for the quick buck. Now that things are tough they will bail and let the sh!t fall on others.

is_that_so

Luxuries are for times of perceived plenty and even in this case only an option for a very small number.

A relative based in the UK was commenting on a company ( not construction ) he knew, which collapsed because he lost one very large contract - pretty much his only one.

IMO the double whammy of the credit crunch and property slowdown has left some businesses very exposed but like all of these things the better-run companies will survive.

mikemac

Is it true the Revenue always get first in line for whatever liquidation cash is available?

Imagine you're an ordinary person and you lose your deposit. Wow, that'd be tough

Or maybe you own a house but the rest of the estate is unfinished and left like a building site and a right mess?
Do County Councils take bonds for this?

is_that_so

AFAIK Revenue are preferential creditors, followed by the banks and then everyone else gets to scrap for what's left.

johnnyskeleton

DublinDilbert wrote: »

It going to be interesting to see when stock starts to be liquidated by a liquidator what bargains there might be out there and if anyone will take them up on it!

Or, they will go into examinership and the examiners will have the same misguided view of the property market and decide it's better to hold off sale for a year or two.

DublinDilbert wrote: »

It seems to be a massive glut of apartments out there, I guess you never just build a few apartments, you can't build 1/2 a block and sell them, then build the other 1/2... where as with houses you can build 1/2 an estate, then build the other 1/2 next year etc....

To be honest, the gult of properties would appear to houses outside the cities rather than apartments in the cities, but it will be interesting to see if there is the same level of demand for apartments, especially as apartments appeal mostly to FTBs and investors.

johnnyskeleton

micmclo wrote: »

Is it true the Revenue always get first in line for whatever liquidation cash is available?

I think it's:
1) revenue (for taxes outstanding)
2) employees (back wages)
3) secured creditors
4) unsecured shareholders
5) shareholders (with different priority for the different kinds of shares held).

The man on the street who has paid a booking deposit would be an unsecured creditor, whereas if he has paid the full contract deposit it he may be a secured creditor.

jmayo

BigglesMcGee wrote: »

ahhh, hide the money and screw all your creditors, staff and clients. I bet the directors are still rich though. Scumbags.

I would think there will be some more of this. Most of these guys were only it it for the quick buck. Now that things are tough they will bail and let the sh!t fall on others.

Couldn't have put it better.
Watch the owners of the company. Miracously they or their clsoe relatives will be the ones heading up another company in a couple of years.
As stated there are goping to be a few more of these, unless of course they convince the Developer party, sorry FF, to bail them out by buying excess stock for social housing.

The_Conductor

jmayo wrote: »

Couldn't have put it better.
Watch the owners of the company. Miracously they or their clsoe relatives will be the ones heading up another company in a couple of years.
As stated there are goping to be a few more of these, unless of course they convince the Developer party, sorry FF, to bail them out by buying excess stock for social housing.

With an 8.6 billion hole in the public finances- and the likelyhood that we will breach the stability pacts 3% ceiling by August, I think that is highly unlikely...... A few maverick TDs and Councillors who have tried to pull this one have been burnt (notably in Galway- where they managed to flitter through their entire annual allocation by mid March expecting central government to get them additional allocations....

Revenue and the Companies Office are very vigilant regarding Phoenix companies- you can be certain that some of the lessons of the past have been learnt and will not be repeated.......

Victor

Note the full story has further details "John Breslin for the companies said that houses built by DFL were "simply not selling" in very adverse trading conditions." DFL was an builder.

Karoma wrote: »

This must obviously be a sign of troubled times, nothing else, not even the tiniest thoughts of mismanagement should be entertained.

Who knows?

I imagine you'll see two things in the next while (a) people being liquidated because they have no cash flow, but otherwise are decent businesses (b) people who have taken too much out of their company, grossly overtraded, mismanaged or defrauded the company and its creditors.

is_that_so wrote: »

IMO the double whammy of the credit crunch and property slowdown has left some businesses very exposed but like all of these things the better-run companies will survive.

Quite possible.

johnnyskeleton

Victor wrote: »

I imagine you'll see two things in the next while (a) people being liquidated because they have no cash flow, but otherwise are decent businesses (b) people who have taken too much out of their company, grossly overtraded, mismanaged or defrauded the company and its creditors.

Ironically the creditors of (a) could be in a worse position than those of (b) because the directors of (b) can be held personally liable for any losses incurred while they were trading insolvent, and obviously when they go into liquidation any funds fraudulently taken from the company can be sought by the liquidator.

Victor

DublinDilbert wrote: »

This could just be the tip of the ice-berg.... who knows how many of this companies suppliers will be pushed under also...

Suppliers probably won't come out too bad, its the sub-contractors who will be hurt badly.

It seems to be a massive glut of apartments out there, I guess you never just build a few apartments, you can't build 1/2 a block and sell them, then build the other 1/2... where as with houses you can build 1/2 an estate, then build the other 1/2 next year etc....

Well, what some do is sell part of the block and rent the rest.

BigglesMcGee wrote: »

ahhh, hide the money and screw all your creditors, staff and clients.

Lets find out ffirst before jumping to conclusions.

micmclo wrote: »

Is it true the Revenue always get first in line for whatever liquidation cash is available?

Client accounts refunded, then mortgages, then Revenue, other preferential creditors and then everyone else. Of ourse the banks are likely to have personal guarantees from the directors / shareholders.

Imagine you're an ordinary person and you lose your deposit. Wow, that'd be tough

I'm not sure if thats a problem in cases like this - the deposit should be held separately and anyway you presumably have a buyer that will hand over cash.

Or maybe you own a house but the rest of the estate is unfinished and left like a building site and a right mess? Do County Councils take bonds for this?

They used to, I don't know if they still do.

luckat

It doesn't sound such a huge amount to owe, considering the prices of the houses they sell. One house sold should wipe out that debt. Odd.

The_Conductor

luckat wrote:

It doesn't sound such a huge amount to owe, considering the prices of the houses they sell. One house sold should wipe out that debt. Odd.

Not really. The liquidator has reaccessed the situation, and debts are actually more akin to EUR5.2m. Given that most of the work this particular developer engages in are contract developments for private individuals, on a margin, it wouldn't take too long without work to force them to start laying off employees, and eat into reserves (or alternatively, not lay off employees and continue making happy sounding noises to creditors and employees, in the hope that things improve- which obviously hasn't happened.......)

They are quite dissimilar in their operations to the likes of Shannon Homes or other large developers- and likely very much more exposed to the downswing in the economy.........