Professor Irene Lynch Fannon:

I will respond to this question even though it seems to be outside the remit of the particular statutory provisions that are being proposed. When companies split their asset-holding operations from their operational activities, you can have one part of a group where the corporation would own valuable assets and another part of the group where the subsidiaries would run the operational activities on a day-to-day basis. When the operational activities on a day-to-day basis get into trouble, those subsidiaries can be liquidated. Then the question is whether the group as a whole, which might be quite profitable in other areas, is obliged to contribute. The underlying issue for those of us in Ireland and other common law countries is that we take the doctrine of corporate personality very seriously. It has advantages and disadvantages in all sorts of ways but it certainly has disadvantages in regard to looking for contributions from otherwise profitable parts of a group in its entirety.

I would like to mention two quite radical provisions in the Companies Act, sections 599 and 600. As I have said, they are outside the scope of what is being considered this morning. These provisions were originally borrowed from New Zealand. They allow for what we call pooling and contribution orders, whereby a court can order the pooling of the assets of two companies that are insolvent in a group, or are being liquidated in a group, in order that creditors can be paid. More importantly, a contribution order can be sought by a liquidator from the High Court. We have made some specific recommendations to improve the efficacy of that particular provision. Those recommendations are made in the 2021 report. Our advice to the Government is that we can improve those contribution orders. In my opinion, that is probably one of the most effective ways to address the specific issue that has been mentioned now. I emphasise that it has nothing to do really with preferential creditors under section 621.