Louise O'Reilly (Dublin Fingal, Sinn Fein) | Oireachtas source

I think it is safe to say there is more or less unified agreement that there has long been a need for the examinership-lite model, and that is what the small company administrative rescue process Bill 2021 attempts to deliver. The Bill, while long overdue, is welcome, and I will work constructively and thoroughly to ensure there are no undue delays in getting it implemented. There are many welcome aspects of the Bill, which outlines the small company administrative rescue process. However, the success or failure of the process will boil down to two things: speed and cost. The new process must be not only cheaper than the current administrative process, which is estimated to cost on average between €80,000 and €120,000, but also quicker. It is hoped the new process will reduce the costs to between €20,000 and €50,000, which is extremely welcome. Any reduction in costs will be welcome if we can achieve it. However, these costs are only estimates, and my concern is that in practice they could end up being much higher. Regardless, the costs, even if the target of €20,000 to €50,000 is achieved, can still be prohibitively expensive for micro businesses and some small companies. I hope that through the passage of this legislation we can work out ways to achieve even greater cost reduction so as to benefit micro and small businesses. That is something we can tease out on later Stages.

As for the length of time the new process will take, it is estimated that there may be little reduction in the length of time it takes to conclude the new small company administrative rescue process in comparison with normal administration. As outlined in the legislation, the process could take up to 49 days to produce a rescue plan, and it could take even longer to implement it thereafter. I feel that this area can be improved on, and perhaps we should look at amendments that will reduce the timeframe to a month instead of a month and a half.

The Bill also seeks to give a permanent statutory footing to virtual AGMs. From speaking to many businesses, I understand this is most welcome. I have included an amendment to allow for virtual meetings of members and creditors where a rescue plan has been agreed. I hope to speak further about that on Committee and Report Stages. Again, we will have an opportunity to tease that out fully. In normal times, but especially Covid times, there can be many issues whereby an otherwise sound company can end up in difficulty with debt, and I hope this legislation will ensure that their way out of that difficulty is quick, cheap and straightforward and that they can return to profitability as soon as is possible. Utilising the administrative process through this Bill, I hope, will achieve that. Simple changes that businesses have long called for, such as the commencement of an administration process by resolution of the directors of the company rather than by application to the courts, will make a difference. So too will changes whereby a rescue plan can be approved without the requirement of court intervention provided that the majority in value of an impaired class of creditors vote in favour of the proposal and no creditor raises an objection to the plan within the 21-day period which follows the vote.

It is important that creditors are also protected, and the small company administrative rescue process incorporates safeguards for the protection of creditors of the companies engaging in the process. There is no automatic stay on proceedings to recover debt owed by the insolvent company; therefore, creditors are not impaired by agreeing and entering into the rescue plan. Creditors can engage with the process adviser on his or her appointment and disclose any facts they consider relevant to the process. The process adviser will be subject to the same reporting requirements as the liquidator. Company directors will be subject to the existing restriction and disqualification regime provided for under the Companies Act 2014. The Office of the Director of Corporate Enforcement will also have the power to examine books and investigate, as appropriate, in line with what is provided for in respect of liquidations, receiverships and examinerships. These are all important aspects of the legislation. What is key for all parties is that the rescue plan must satisfy the best interests of creditors test. This means that the plan must provide each creditor with a better financial outcome than if the company were liquidated, while also ensuring the future viability of the company in question.

At its core, this legislation is about saving companies and, ultimately, saving jobs. Therefore, I feel there needs to be further provision for workers. It is important that a rescue plan for an eligible company does not include a reduction in the number of employees unless this has been done by agreement with employees and their recognised trade union or representative body, save in the case of a voluntary redundancy process. Also, any rescue plan should make provision to ensure collective agreements can be and are honoured regardless of what happens to the company into the future. In that regard, I have tabled amendments to achieve just this, and I hope we will get an opportunity to discuss these further on Committee Stage.

While this legislation might not get the same coverage as other legislation because it is relevant only to small and micro companies, it is important to remember that these companies provide employment to 788,000 workers in this State. This is very significant legislation which, it is to be hoped, will have a wide-ranging and positive impact. The reality is that the pandemic has taken a significant toll on the economy in general, but especially on small and micro companies. Once Covid-19 restrictions ease this summer and Government support and creditor forbearance reduces, it is clear that a cost-effective restructuring process will be required. Numerous companies with sound business models incur significant debts for many reasons. This new process must put those businesses and their workers front and centre, and ensuring that the new process is cheaper and quicker is essential to that.

We are discussing liquidations. The Minister of State has a report on his desk, the Duffy Cahill report. Provision must be made to look after workers in a liquidation scenario. I have put forward some amendments, which we will have an opportunity to discuss. I watched the debates in this House after the Clerys closure from outside. To a man and woman, every Member took to his or her feet and said we cannot allow this to happen again. Since then, we have had the Debenhams and TalkTalk closures and a list of other examples. Every time this happens, we say we cannot allow it to happen again. I urge the Minister of State to act on the recommendations and select whatever is the preferred option and to talk to the Opposition. We will not do anything other than try to be constructive and get this done.

We need to ensure workers are not left high and dry by the process because that will not do anyone any favours. This process will benefit companies and its ultimate objective is to save the businesses and the jobs. There is another body of work to be done to ensure those jobs are decent jobs. That is the work of the trade union movement, working co-operatively with progressive parties like Sinn Féin to ensure we can make work better. We need to recognise that while we have legislation to help save businesses, we also need legislation that protects workers in a liquidation because very often they are left aside.

I will refer briefly to the workers in Stobart Air who have just been laid off in the middle of a pandemic. This is the worst news at the worst possible time. The aviation sector has been decimated. A plan of sorts, the aviation recovery task force plan, exists but there seems to be no appetite on the Government's part to implement it. The 480 workers must now deal with the Department of Social Protection. They are trying to sort out their redundancies. Many are represented not by a trade union but by a staff association. This is my fourth or fifth time to make this call. We need a named person, either from the Department of Enterprise, Trade and Employment or the Department of Social Protection, with whom these workers can liaise because they are at sea. They are not familiar with the process. They were working in a viable industry and stopped working not because they wanted to but because of the pandemic. They want nothing more than to be able to go back to work but they cannot do so. They now face collective redundancy and they need some help to access their entitlements, including redundancy and social welfare payments. I ask that the Minister of State liaise with his colleagues in his Department or in the Department of Social Protection to ensure the assistance these workers desperately need is provided.

I will not be able to stay for the duration of the debate as I must go to another meeting. I will follow proceedings on the monitor.

See this speech in context