Deirdre Clune (Cork South Central, Fine Gael)
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Question 57: To ask the Minister for Enterprise; Trade and Innovation if he has satisfied himself that the existing examinership process is an effective instrument for protecting viable small business that encounter credit difficulties; and if he will make a statement on the matter. [2910/11]

Batt O'Keeffe (Cork North West, Fianna Fail)
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The existing examinership process is effective and fair for companies of all sizes, large and small. The examinership provisions are contained primarily in the Companies (Amendment) Act 1990 and are widely recognised to have operated successfully in the two decades since their introduction, a period which has seen both sides of the economic cycle.

The fundamental principle of the examinership provisions is that they offer protection for a short period to a company which is considered by the court to have a "reasonable prospect of survival". I stress the importance of this test – the remedy of examinership is only intended to be availed of by a company which has a reasonable prospect of continuing on an ongoing basis after the examinership and which has an underlying sound business model to continue. The examinership process does not, and was never intended to, offer businesses an opportunity to walk away from debts or from amounts legitimately owed to other creditors. It must be remembered that the debts of any company do not exist in a vacuum. Often these debts are owed to other small businesses whose viability in turn may depend on the successful recovery of the amounts involved.

Representations have recently been made to my Department suggesting changes to the examinership process which would significantly reduce the role of the courts – a form of "examinership lite". Given that successful examinerships inevitably involve losses for creditors – whose viability may also be at stake – it is critical that the process is not only fair but seen to be fair, and the role of the courts is not to be underestimated in this regard. Subject to the maintenance of this fairness criterion, I remain open to any suggestions that may improve the effectiveness of the process.

Deirdre Clune (Cork South Central, Fine Gael)
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My question referred to viable small businesses. The reality is that an examinership process is not available to small businesses because of the excessive costs and lengthy court times associated with it. We are not talking about complete reform of our bankruptcy system - even though it is stuck in the dark ages - rather some type of flexible arrangement that can be introduced without delay This is about saving jobs. Last year more than 1,200 small businesses closed, if my figures are up to date. I heard another Minister say on the radio some time ago that this is not a priority for the Government. It should be a priority to support viable small businesses. In Britain and Northern Ireland there are more flexible arrangements in place. As it stands, the cost of the examinership process is excessive.

Batt O'Keeffe (Cork North West, Fianna Fail)
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I understand where the Deputy is coming from and I too am anxious that the process be expedited as much as possible. However, there is an important element that we cannot ignore, which is maintaining an impartial involvement. The courts afford that and thus ensure there is confidence in the process.

As I said, proposals that have been submitted to the Department in regard to a so-called "examinership lite" process are being examined. However, there are concerns relating to these submissions. For example, there is concern about the absence of an independent accountant in the proposed model and regarding the emphasis on the avoidance of publicity. Also of concern is the proposal that arrangements may be approved if a body comprising 75% of the value of creditors - which may very well comprise a bank - approve the proposal. A reply has issued to the proponents of these submissions to the effect that while we are anxious to be as accommodating as possible and undertake to examine the proposals in detail, the credit supply clearing group is not totally in favour of the proposal.

Deirdre Clune (Cork South Central, Fine Gael)
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There is much that can be done to improve the situation for small businesses. In the case of the large number of companies that have gone out of business since the start of the year the issue that is often referred to as the straw that broke the camel's back is excessive rents. Is there any progress in devising measures in this area? We must think outside the box rather than simply referring these issues to the courts.

Batt O'Keeffe (Cork North West, Fianna Fail)
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While the Department does not keep statistics on the number of examinerships, the Insolvency Journal website has noted a dramatic decrease in 2010 in the number of companies seeking protection from creditors by placing themselves in examination.

Deirdre Clune (Cork South Central, Fine Gael)
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That is because of the costs. According to that journal, a total of 16 companies went into examinership in 2010, compared to 37 in 2009. That represents a decrease of 57%.

Richard Bruton (Dublin North Central, Fine Gael)
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Yes, but at a time when closures are going up, so the inevitable consequence is what Deputy Clune is saying.

Deirdre Clune (Cork South Central, Fine Gael)
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What about the rent issue?