Thomas Pringle (Donegal South West, Independent) | Oireachtas source

I am glad to have the opportunity to contribute to the debate on the Companies (Amendment) Bill 2014. I commend Deputy Sephen Donnelly and his team for putting together this legislation and bringing it before the House.

The Bill seeks to make examinership a cheaper and more viable option for companies in difficulty or at risk of receivership and insolvency. It is a very clear statement for the legislation, especially if we consider that last year 360 firms went into receivership, while only 21 entered examinership. That indicates there must be something particularly wrong with the system as it stands and the Bill seeks to make it easier for companies to enter the examinership process and enable a third party to formulate ways of restructuring the business and protecting jobs. That is a tenet of the Bill and the Government should consider it on the basis that it is trying to protect jobs and keeping as many companies as possible operating in the State. It is only through companies continuing to operate, trade and work their way out of difficulties with the protection of an examinership process that they can contribute, with creditors standing a better chance of getting money back than if a company goes into receivership.

In outlining his opposition to the Bill the Minister stated it would weaken the position of creditors, but I do not understand how that can be the case. I have listened to much of the debate over the two nights, but I am still not satisfied as to how that could be the case. As I understand it, if a company goes into receivership, preferred and priority creditors are dealt with. They include the State in the form of the Revenue Commissioners which deal with PRSI, PAYE and VAT payments. Secured creditors are dealt with after this and if there is anything left over, ordinary creditors will receive a proportion of what remains.

It stands to reason that in a receivership case very little is left over for creditor small and medium enterprises as the company and all of the assets have gone, with the State and secured creditors taking priority. In an examinership case the company continues to traded and has the chance to trade its way out of difficulty. Creditors would then receive a larger portion of what they were owed, although they might be put in a position where they would have to do a deal or accept a write-down on what was owed in the process of the examinership in order that the company could continue trading. Surely that scenario still offers a better chance for a creditor to recover debt. Perhaps I am completely wrong in my reading of this, but it seems that this would be a better option than forcing companies into receivership, disposing of assets and forcing significant write-downs on all creditors.

I listened to Deputy Joe McHugh speak about "subbie" busters and how companies could go into liquidation before being set up again, with subcontractors losing out. He argued that they should be protected, but that means nothing in the context of this Bill, as the company that will follow such a practice will follow it regardless of this legislation. Even if the Bill could be passed, such a company will not look to go into examinership; it will instead go straight into receivership. As the subcontractors will be burned in any case, they should have protection under other legislation; this Bill would not have an impact on their position.

Under this legislation, the examiner would have the power to reduce upward-only leases to which companies might be tied into in order to make them viable. That is a laudable possibility which should become a reality. Before the general election Fine Gael spoke long and hard about how it would end upward-only rent reviews, but this Bill would give the opportunity to a business that could be viable to achieve a sustainable rent.

The argument against the Bill seems to be about protecting creditors, but I do not see how it can stand up. When the Minister spoke about protecting creditors, was he really speaking about protecting the State and ensuring it received the due taxes, VAT, PAYE and PRSI? Perhaps it is better for the State if a company goes into liquidation as the Revenue Commissioners can recover debts before anybody else can get a look at the failed company.

The Minister mentioned property rights, which is the biggest cop-out I have seen in this House. Property rights are often mentioned, with people saying they are sacrosanct and nothing can be done to affect them. Property rights are enshrined in the Constitution in Article 43, but Article 43.2 attaches conditionality. No Government seems to have the neck or the balls to test this provision by bringing forward legislation that could stand up against it. Article 43.2.1° indicates that property rights should be qualified in civil society in terms of social justice; surely it would be social justice to allow people to continue to work, businesses continue to trade and for all of them to operate for the betterment of society. Article 43.2.2° indicates that property rights should be qualified in terms of the common good; is it not in the common good to keep people in employment and everybody working? That must surely be tested by a Government.

See this speech in context