Catherine Murphy (Kildare North, Social Democrats) | Oireachtas source

It is the way the sound carries in the Chamber.

This is undoubtedly a challenging thing to accept but as lawmakers our primary focus should not be to slavishly attempt to keep things as close as possible to how they functioned before the pandemic. Instead, we need to look at how things can best be structured in our laws and legal system to respond to our new reality. This would require a root and branch approach as to how the primary Act should function during the pandemic. Looking at the legislation we are discussing today I am not convinced that this has been fully considered.

There are around 240,000 companies registered in Ireland and even if only a small percentage of these find themselves insolvent during this crisis we could find thousands of companies struggling to navigate the terms of the primary Act. This Act, we should remember, is a key foundation document of our company law and amendments to it, or indeed a failure to make necessary changes in a timely manner, have the potential to make a significant impact both positive and negative on the functioning of companies in crisis.

I note that during the debate on the Bill on Second Stage in the Seanad the Minister of State attempted to justify the limited scope on the basis that efforts were focused on matters which could be concluded within a shorter timeframe. As such, this Bill deals only with those items which were required immediately and which are capable of being progressed quickly. This viewpoint is clearly evident in what we have been presented with today but in a time of crisis something so arbitrary as to when it is decided to vote the Dáil into recess is not an excuse to put things on the long finger. I would have hoped that this would have given the Minister of State and his Department a stronger impetus to immediately move to address other issues which fall within his remit. Unfortunately, the opposite appears to be true.

This was highly evident in the Government’s amendment to a motion to support the Debenhams workers last week. Instead of committing to concrete actions this Government reaffirmed that its intention to review the Companies Act 2014 at some point with a view to addressing the practice of trading entities splitting their operations between trading and property, with the result that the trading business, including the jobs, goes into insolvency and the assets are taken out of the original business.

The same kind of thing happened with examinership in respect of CityJet, for example. Our examinership system has preferred the parent company in the Cayman Islands, which will be protected by Irish law. The problem is that the very high-skilled Irish jobs will cease to exist here and will exist in one of the Nordic countries, although I cannot remember exactly which one. Essentially, our company law is protecting a company in the Cayman Islands at the expensive of jobs here. There are very big issues that need to be dealt with.

I am deeply concerned that we may be on the cusp of a significant insolvency crisis and as a result we may see an up-swing in these sort of predatory practices which gave rise to the Duffy Cahill report in the first place. It is not acceptable that a Department at the forefront of an economic response to the pandemic is content to be rearranging the deck chairs while we barrel towards an iceberg. We need more than housekeeping and promises of further reviews.

This opportunity, for example, could have been used to introduce a range of new legislation which has been in the Department for years, or a larger scale amendments to this piece of legislation. Just last week we saw issues with the Office of the Director of Corporate Enforcement laid bare in its action in the High Court, all the while the Companies (Corporate Enforcement Authority) Bill remains in limbo. Alternatively, a much simpler piece of legislation could have been introduced to address the deficiencies in the Companies Act with regard to section 599 which allows, in appropriate circumstances, the court to make an order that any company that is or has been related to the company being wound up shall pay to the liquidator of that company an amount equivalent to the whole or part of all or any of the debts provable in that winding up.

I was reminded of this section when the Minister of State referred to it in quoting the Duffy Cahill report in his speech on the Debenhams workers motion last week. He stated that the report found that the provisions of the Companies Act 2014 that are already available do not appear to be in need of amendment but more in need of use. He did not, however, include the sentences that followed that passage which stated:

It is striking that many of the provisions of the Companies Act which may be of assistance are not frequently invoked (such as section 608) or are not invoked at all (such as section 599). The reason for this appears to relate to the costs and risks associated with such applications, rather than the formulation of the provisions themselves. For this reason, one of our proposals includes conferring power on the Minister, as creditor of an insolvent employer (having paid the employee claims through the Social Insurance Fund), to delegate the taking of statutory applications to a liquidator and to provide funding to the liquidator for that purpose.

I argue that this would have been a fine opportunity to do just that and confer such powers on the Minister.

If a legal remedy cannot effectively be utilised with the frequency with which it is intended, it is not fit for purpose. This is a point from the CLRG with which I disagree. The approach was to examine whether the section has the power to fulfil its purpose solely in a legal sense, whereas this House should instead focus on the effectiveness and impact.

I see my time has expired but there will probably be an opportunity on Committee Stage to make some further contributions.

See this speech in context