John Browne (Wexford, Fianna Fail) | Oireachtas source

I welcome the opportunity to contribute to the Second Stage debate on this Bill. Fianna Fáil supports the principle of the Companies (Miscellaneous Provisions) Bill 2013, which among other things will allow small companies that are insolvent but have the potential to be rescued to apply to the Circuit Court for examinership. If properly implemented, this measure should substantially reduce costs relative to the current High Court process.

Currently, despite our broadly similar business structures only 1% of Irish SMEs in difficulty as compared with 25% of US SMEs, restructure. For this legislation to be successful, it must be endorsed by the accountancy and legal professions. The Judiciary must also be trained in the complexities of company restructurings. One of the major failings of the current system is that judges do not appear to have the necessary knowledge to deal with high powered cases.

For an examinership to be successful, the primary need of the entity that emerges is often access to credit. Unless this issue is addressed, the good intentions of this legislation may not be realised. Despite the many initiatives taken by Government to deal with this issue many small companies are still finding it difficult to access credit through the banks. In many cases, they are not only being denied access to credit but their overdraft facilities are being substantially reduced on a regular basis.

That companies wishing to avail of examinership will be able to make applications in this regard to the Circuit Court is a welcome development. Currently, such applications must be made to the High Court. Many small companies find the idea of going to the High Court a daunting prospect and see it as the preserve of larger companies and multinationals, including, as witnessed in the past number of years, high profile developers. Many small companies would not feel comfortable in the surroundings of the High Court and justifiably believe that the costs could spiral out of control. We have had many examples in recent years of exorbitant costs in respect of matters brought before the High Court.

In Ireland, approximately 2,000 companies per year liquidate. By comparison, the level of examinerships may be as low as 30. The Minister might when responding to the debate elaborate on the reason people are reluctant to go down the examinership route. By contrast, in the United States approximately 25% of insolvent companies are restructured and given a chance of survival. In allowing small companies a more cost effective route hundreds of jobs may be saved. We are all aware of the companies that have gone the examinership route. A number of companies in my own county have in recent years gone this route. Not alone have these companies survived, they continue to thrive and expand. It is important small companies in particular are given every opportunity to survive.

As stated by Deputy John Paul Phelan, examinership was introduced in Ireland in 1990 to help save the Goodman International meat processing firm after the threatened Iraq war brought it to the brink of collapse. The company survived. Other successful outcomes in terms of examinership include Eircom, Homebase, B&Q and Thomas Crosbie Holdings. In many of these instances upward only rent provisions were a key factor. This is an issue with which past governments and the current Government has not come to grips with.

For the proposed changes to be successful the concept of examinership being handled by the Circuit Court will have to be embraced by the legal and accountancy professions. We all hope that fees will fall accordingly. There is already a worrying lack of transparency about professional fees. Members of regulated professions should be obliged to meet strict price transparency requirements. One approach to this would be to require that professionals such as solicitors, barristers, auditors and accountants be required to post prices for their services, including hourly rates, on the relevant regulator's website. All professionals should be required to provide meaningful cost estimates to prospective customers. As one of my sons is a barrister he will probably not speak to me again for calling for this type of transparency. It is an issue that should be looked at in the context of this Bill. There will also be a need for training of judges to ensure they are adequately versed in what may be complex commercial cases. The High Court is already creaking under the weight of pressures arising from the complex volume of examinerships, receiverships, liquidations and new waves of recession-related litigation. It is important this log-jam is not transferred to a lower court. If this happens, it will not be possible for small companies in difficulty to get the quick decisions they require.

This issue requires urgent and serious consideration. The Minister might when replying indicate if provision is made in this Bill for the training of judges or, if the Minister for Justice and Equality, Deputy Shatter, has any proposals in this regard.

It seems that most members of the Judiciary are not equipped to deal with the complex cases that may come before them in regard to examinership. That needs to be addressed.

The Bill also provides for electronic filing of returns to the Companies Registration Office. This long overdue change will remove the burden of potentially having to scan a signed copy of each page of a company's annual report individually in order to file it electronically. We have not yet fully endorsed the concept of e-Govemment in this country by allowing as much interaction as possible between the State and the citizen to be done electronically. State agencies and Departments must seek to assist citizens in conducting their businesses online as a way of speeding up transactions and reducing costs. In that context, this provision is very welcome.

The Bill is a step in the right direction. It is important that members of the relevant professions should be required to operate in an open and transparent manner and that the Judiciary receive training to help them to deal with the issues on a day-to-day basis. I am sure any amendments we on this side of the House bring forward to improve the Bill will be given a fair hearing by the Minister.

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