Professor Irene Lynch Fannon:

To briefly answer the question that was raised, let us focus in particular on suppliers. The priority system starts with secured creditors. Section 621 inserts a whole class of preferential creditors before unsecured creditors. Unsecured creditors would typically in this case be suppliers of the company. Therefore, we have this whole class of preferential creditors that will take priority at the moment over unsecured creditors, suppliers, SMEs and those kinds of traders.

At the moment, section 621 covers rates, taxes, employer contributions, VAT, local property taxes, all wages payable within four months, holidays, social welfare contributions, contributions under section 13 of the Social Welfare Consolidation Act, accidents and then two other areas that are relevant to employees' pay and superannuation. Section 621 has been in the Companies Act schema since 1963.

Over periods of time additional preferential creditors have been added, especially where new taxes such as VAT, but also social welfare contributions, are created under the Social Welfare Consolidation Act. Accordingly, this proposal would add an additional enhanced employee redundancy payment over and beyond the statutory entitlement and it will obviously, by necessity, reduce the pool of assets that will be available to unsecured creditors. A typical unsecured creditor would be a supplier and perhaps an SME as the Senator mentioned. That is a brief overview of the concern I think he is expressing. It is a difficulty. The other thing is that typically, where you have a range of preferential creditors, including Revenue, you will find there may not be enough assets to even cover all preferential creditors, so their entitlements are reduced on a pro ratabasis at the moment. In acute situations that is often where the assets run out. The SMEs are there behind that as unsecured creditors and typically as suppliers.