Aodhán Ó Ríordáin (Dublin Bay North, Labour) | Oireachtas source

This is a Bill whose aims we in the Labour Party consider reasonable. The objective is to try to put in place a SCARP to reduce the number of companies that go into liquidation and instead to give them access to an affordable rescue plan, an alternative and lower cost version of examinership. In the context of Covid, there is pressure on hundreds if not thousands of companies in affected industries that are struggling to survive. We must ensure that perfectly viable companies that are hamstrung by Covid-related debts and obligations have a choice between the new SCARP provided for in this Bill and liquidation.

I understand the pressure to get something done, and to do it quickly. We started the examination of this Bill in the hope that we would be able to swiftly approve the new process and commit to ironing out any problems as we go. However, the more we look at it, the more worried we are that this legislation is far too important to be rushed through without proper legislative scrutiny. The Bill is 64 pages long and will undoubtedly become the bedrock legislation for most cases where companies will be rescued in the next five to ten years. Within that context, there are three main areas that worry us.

The first problem we have is that the Bill does not appear to be compliant with EU Directive 2019/1023. The purpose of the latter is to implement an alternative to liquidation for companies of all sizes in all European countries which will reduce the current level of liquidations, which is exactly what this Bill is designed to do. The Government has asked for a derogation until 2024 for the implementation of this directive, yet we have here the perfect opportunity to implement legislation which would comply. Why will the Government not make the legislation compliant? It appears to us that the Government has no intention of making this small companies administrative rescue process compliant. It will implement compliance in examinership, giving workers in smaller companies less protection than those in larger companies, even though it is workers in smaller companies who need it more. It would be far safer and more effective to make this Bill compliant now rather than try to amend it later.

The second major concern we have is the unholy speed with which the Government is pushing through the Bill. If we were paranoid, we might suspect that the Government is using Covid as a cover for rushing through a Bill which would otherwise be painstakingly examined, line by line, and proper consideration given to amendments. We got first sight of the actual Bill only a week ago, yet the deadline for amendments to the Bill was the day before Second Stage had even started. It is not good practice for us to have a deadline for Committee Stage amendment before the Bill has even been discussed on Second Stage.

As important as this Bill is for companies in the context of Covid, this is not a Covid-related Bill at all. It was part of the Company Law Review Group agenda long before Covid-19 even existed. Unlike other Covid-related emergency measures, the Bill, as it stands, is not time-limited. The fact that there is no time limit greatly leads us to fear that, by accident or design, we could end up with flawed, unscrutinised legislation becoming the bedrock of the industrial rescue process for a generation.

Our third concern is that this Bill will leave workers less protected than they should be. In the short time available, I submitted three amendments designed to address some of the most obvious flaws, but I feel we have only scratched the surface, which again is the reason we should extend the time to debate or put in place time limits if the Government insists on pushing the Bill through. The Bill, as it stands, fails to protect workers from the cross-class cram-down, unlike similar legislation in New Zealand, where workers are excluded as a protected class of creditor. Under section 558N, any equality claim should be excluded from the court's power to stay proceedings, and under section 558L, unpaid awards for workers should be excluded from write-down without the need for a worker to actively assert that right as a creditor.

The voting majorities may need to be changed. We are worried that workers' terms and conditions could be attacked or undermined as part of the defence against onerous contracts, as was threatened recently in a dispute relating to the aviation industry.

The workers affected by the terms of this Bill will be mostly under-represented by a union and many of them will not have practical access to exercise their rights and protections because they will not have the legal representation to even know that they can or should enforce them. Without explicit protection as a unique class of creditor and union representation to defend the few rights they have, we fear that workers will be subject to exploitation.

In summary, we wish we could join in unqualified support for the Bill. There is no doubt that cheaper access to a rescue plan for smaller companies would be preferable to liquidation, but we remain to be convinced that this Bill is ready and that what may seem to be minor flaws will end up being exploited at the expense of workers. At a very minimum, the Government should extend the period for considering the Bill and make sure that it is subject to proper legislative scrutiny.

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