Mary Mitchell O'Connor (Dún Laoghaire, Fine Gael) | Oireachtas source

I move amendment No. 34:

In page 58, between lines 17 and 18, to insert the following:

“Amendment of section 621 of Principal Act

90. Section 621 of the Principal Act is amended—

(a) in subsection (2)(e), by the substitution of “to the extent that the company” for "save to the extent that the company”, and

(b) in subsection (7)(b), by the substitution of “any charge created as a floating charge by the company” for “any floating charge created by the company”.”.

Amendment No. 34 amends section 621 of the Companies Act for two separate reasons. Section 621 provides for preferential payments in the winding up of a company. It sets the order of priority in which debts owed by that company are to be paid. Subsection (2)(e) of section 621 provides for the priority of damages and costs owed to the employees for an accident. It was intended to carry over the wording from the previous provision that was in the Companies Act 1963, as amended. However, the word "save" made its way into the text. Amendment No. 34 deletes that word for consistency with the previous law and for clarity.

Amendment No. 34 also deals with an issue of more substance. It addresses an issue that has arisen from a recent judgment of the Supreme Court. In that judgment, the court confirmed a decision of the High Court to the effect that crystallising a floating charge before a liquidator is appointed can improve the priority of the charge holder. The result is that the holder of the floating charge can effectively leapfrog preferential creditors such as the Revenue Commissioners and employees. That is clearly contrary to the intention of the Legislature in giving priority to particular types of creditors ahead of others, including holders of floating charges. Amendment No. 34 is intended to restore the standing of the various creditors and to ensure that the operation of a floating charge returns to its previous standing behind employees and Revenue.