Dáil debates

Friday, 2 July 2021

Companies (Rescue Process for Small and Micro Companies) Bill 2021: Second Stage

 

1:15 pm

Photo of Robert TroyRobert Troy (Longford-Westmeath, Fianna Fail)
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I move: "That the Bill be now read a Second Time."

I am pleased to have the opportunity to introduce this Bill. Fundamentally, it represents an effective lifeline to viable small businesses and affords them an opportunity to restructure their debts and continue trading. In light of the Covid-19 crisis, the Government made a commitment to review the Companies Act to simplify and improve examinership laws for our small business sector. A key commitment in the programme for Government, this Bill is a culmination of a significant body of work by the Company Law Review Group, CLRG, and nearly a year's work by me and my officials, which included important consultation with business and industry representatives and, of course, the support of the Members of the Oireachtas, demonstrating that when we work together collectively, we can make a difference.

This Bill delivers a new corporate rescue framework designed specifically for small and micro companies, which form the backbone of our economy and communities. The Bill provides an alternative to examinership which is more cost-efficient and which can be concluded within a shorter period. As we emerge from the pandemic, the Bill will ensure that the necessary legal framework is in place to help viable small and micro businesses to stay in business. Delivering this Bill is reflective of the Government's commitment, and mine, to our small companies sector and the many jobs it supports.

Before I go through the specific provisions, I want to outline the process undertaken to develop the Bill and give appropriate context and recognition to the stakeholders involved. Throughout the pandemic, the Government has prioritised measures to ensure the survival of the countless small companies across the country. While a response to the crisis so far has proven successful in mitigating the immediate impact of the pandemic, I am acutely aware of the enormous pressure business owners currently face in terms of their liquidity and the sustainability of their businesses. This is particularly true of many small and micro companies, which employ 788,000 employees. Some 78% of those companies operate in sectors that have been particularly challenged by the pandemic, such as retail, hospitality and the service industry.

The Government quickly recognised last year that additional measures would be necessary to support the businesses in the face of the then rapidly evolving crisis. With that in mind, we set our sights on a proactive and comprehensive review of the regulatory framework for the rescue of viable small and micro companies and an assessment of all available policy options to enable these companies to continue in business and return to full operations and profitability. That work began in July 2020 when we requested the CLRG to examine the issue of rescue for small and micro companies and make recommendations as to how a process for these companies might be put in place. As many Deputies will know, the membership of the CLRG, a statutory body, comprises representatives from a wide range of stakeholders, including representatives from the trade unions, business associations and banking and auditing bodies, in addition to academics, legal practitioners and insolvency experts. The breadth of representation makes it uniquely well positioned to advise on matters of company law.

The CLRG delivered its report on the rescue of small companies in October 2020. From that point on, officials from my Department worked to develop the its advice from both operational and policy perspectives. This work involved ongoing consultation with the Office of the Attorney General and key stakeholders, including the Revenue Commissioners, the Department of Social Protection and the Department of Justice. In February, I launched a month-long public consultation on the proposed measures to further inform the development of the general scheme of the Bill. My Department received 17 substantive submissions from representatives of employers and employees across all sectors and industry professionals in the field of company law and insolvency. An overview of these, together with my Department's analysis and subsequent responses, is published and publicly available in a report on the Department's website.

While we set ourselves a very ambitious task - some thought it too ambitious - to develop a new rescue process in the midst of the public health crisis, we did so in the most transparent and accessible way possible. Consequently, I am happy to say that the Bill has met broad support from stakeholders, including industry and professionals in the field.

While I am hopeful that the pressure on small businesses has begun to ease with the gradual reopening of the economy, I fully recognise that many companies, while viable, will nevertheless continue to experience difficulties as we emerge from this crisis. In that context, the Bill is essential to provide these companies, where necessary, with a clearly defined and accessible rescue process that will give them the breathing room they need to get back on their feet. It is our responsibility to ensure this vital legislation is implemented in time to make a difference to those viable small and micro companies that are trading through a difficult period.

I thank the members of the Joint Committee on Enterprise, Trade and Employment, under the chairmanship of Deputy Quinlivan, and the Business Committee for their consideration of the Bill and their agreement to waive pre-legislative scrutiny, which will facilitate the Government in bringing the Bill before the House in advance of the summer recess.

Speaking specifically on what is proposed today, many Deputies will be familiar with examinership as a well-established, internationally recognised framework for the rescue of companies in trading or financial difficulties. We know from years of experience that examinership works and saves both companies and employment. However, examinership as a process is overseen by the court from beginning to end. For this reason, it can be an expensive undertaking and, thus, potentially out of reach for the average small company, especially one in financial difficulties.

The defining feature of this Bill is a novel process which reduces court involvement as far as possible with a view to speeding up the rescue process and reducing the associated costs. The small company administrative rescue process, or SCARP, is initiated by the directors of the company concerned and can proceed without significant court involvement if the company’s creditors are positively disposed towards the rescue plan. The process is capable of conclusion within a shorter timeframe than examinership. Where examinership can currently run for up to 150 days, this process seeks to arrive at a conclusion within 70 days, although it can be suspended where applications to court are required to allow the courts the necessary time and flexibility to deal with the matters raised.

While court involvement is limited, I am conscious that the issue of corporate rescue extends far beyond the distressed company and, as such, the process incorporates robust and necessary safeguards and reflects what I believe to be a fair balance of the sometimes competing interests of stakeholders.

The introduction of this legislation or any new legislation is not without risk. For this reason, officials from my Department have engaged extensively with the Attorney General’s office to ensure the process is constitutionally robust and meets the required standards of procedural fairness. The Bill fundamentally mirrors the key elements of the examinership model in an administrative context. We have, therefore, designed a process which is built on a tried and tested framework, with the benefit of years of experience and jurisprudence. The proposals are founded on an existing bedrock of well-understood and well-respected law and deliver an accessible, fair and balanced process for the broad range of stakeholders impacted by corporate rescue.

This Bill also provides for amendments arising from the CLRG's first phase of work in the area of employees' rights as creditors under the Companies Act in line with the recently published Plan of Action – Collective Redundancies following Insolvency. The plan has been broadly welcomed by the social partners, in particular the Irish Congress of Trade Unions. I express my gratitude to all involved for their constructive engagement in this space and I look forward to our continued work together.

I will now outline the main provisions of the Bill. The Bill consists of three Parts and 12 sections. An explanatory memorandum has been published and it provides a summary of the provisions.

Part 1 contains the Short Title, commencement provisions and interpretation. Part 2 inserts a new Part 10A into the Companies Act 2014 providing for the small company administrative rescue process. The Part, which is divided into 12 chapters, details the legal framework for qualifying for, initiating and the subsequent operation and conclusion of the rescue process.

Chapter 1 defines relevant terms specific to the newly inserted Part 10A for the purposes of the operation of the rescue process for small and micro companies.

Chapter 2 sets out requirements an eligible company must meet to avail of a rescue plan. It provides that the process adviser, who is a qualified insolvency practitioner, must determine whether the company concerned has a reasonable prospect of survival. The chapter outlines various criteria the process adviser may have regard to when making his or her determination on the company’s viability. Where there is a reasonable prospect of survival, the process adviser must prepare a detailed report in accordance with the criteria laid down in the chapter and this report and its recommendations must be presented to the company directors.

Chapter 3 provides for the appointment of the process adviser by a resolution of the company directors. The rescue process is commenced by a resolution rather than by an application to court. The chapter goes on to set out the process advisers' various duties, for example, to keep the original determination as to the viability of the company under constant review and to give notice of their appointment to the Companies Registration Office, the relevant court, Iris Oifigiúil and on the company’s website. It also obliges the process adviser to give notice to employees, creditors and other stakeholders so they are afforded an opportunity to disclose any facts they consider material to the process. In this regard, all relevant parties are involved from early on in the process.

This chapter also deals with the treatment of excludable debt, whereby State creditors, such as the Revenue Commissioners and the Department of Social Protection, may determine to opt out of the process on specific statutory grounds, such as if the company has a poor history of tax compliance. This should provide comfort to businesses that the State will not remove itself from the process for arbitrary reasons. I highlight that there has been significant consultation with the Revenue Commissioners in developing this Bill. The Revenue Commissioners are excludable creditors under the Personal Insolvency Act 2012 and have opted in to over 90% of cases where they are in a position to quantify the debts owed. The Revenue Commissioners have committed to being similarly constructive participants under the process provided for by the Bill.

Chapter 4 provides for the rescue plan process. It allows for repudiation of contracts where the process adviser considers it necessary for the survival of the company as a going concern. Repudiation allows the company, subject to court approval where appropriate, to either formally accept or reject certain uncompleted contracts to which it is party. Any party to a contract which suffers loss or damage because it is repudiated becomes an unsecured creditor for the amount of the loss or damage. The Bill provides for repudiation to be dealt with in two ways. One is by application to court and the other is by way of an out of court process led by the process adviser who will engage and negotiate with the relevant party. Repudiation has proven to be a key tool for dealing with problematic leases in examinership and its inclusion in the new process is welcome.

Under chapter 5, the process adviser is required to call a meeting of all creditors and members to present the rescue plan. The rescue plan is binding without court approval provided at least one impaired class of creditors votes in favour of the plan and no creditor raises an objection to it within a 21-day cooling-off period following the vote. A rescue plan shall be deemed to have been accepted by a class of creditors when 60% in number representing the majority in value of the claims in that class vote in favour of the rescue plan. As with examinership, the proposed process does provide for cross-class cram-down. This means that where one class of impaired creditors votes in favour of the rescue plan, it can be imposed on all classes of creditors.

Under chapter 6, creditors have the right to object to the rescue plan and where that happens, the courts will then have a role in adjudicating the matter, as is currently the case in examinership.

Chapter 7 provides for the treatment of liabilities of third parties for debts of a company using the rescue process.

Chapter 8 provides for the conclusion of the rescue process. This chapter and chapter 9 also incorporate safeguards for creditors such as various enforcement provisions in relation to failure by company directors and process advisers to comply with filing, notice and information obligations. There are also safeguards against and penalties for irresponsible and dishonest director behaviour.

Chapter 10 sets out the various powers of the process adviser such as the power to convene and preside at board meetings and general meetings, to dispose of charged property and to examine under oath any relevant person.

Chapter 11 provides for the remuneration, costs and expenses of the process adviser. Chapter 12 deals with matters of a general nature such as the suspension of the various time limits set out in Chapter 10A while any matter is being considered by the courts and the retention of records for six years.

Part 3 provides for miscellaneous amendments to the Companies Act 2014 necessitated by the introduction of the rescue process such as additional cross-referencing throughout the Act. Part 3 also provides for amendments arising from the CLRG's first phase of work in the area of employees' rights as creditors under the Companies Act in line with the recently published plan of action on collective redundancies following insolvency. These are discrete amendments which improve the flow of information to employees as creditors during a liquidation and provide for a dedicated position for employees on the committee of inspection, a committee which may be elected to oversee the liquidation. Finally, Part 3 provides for the application of the temporary amendments made by the Companies (Miscellaneous Provisions) (Covid-19) Act 2020 to provide for meetings under the small company administrative rescue process to be held virtually during the Covid-19 period.

We are all aware of the enormous pressure business owners currently face in respect of not only their immediate liquidity but also the sustainability of their businesses into the future. This is particularly true of small and micro companies. The contribution these companies make to our economy cannot be overstated. These companies will be key to our country's economic recovery. It is for this reason that my priority since taking office last year has been to develop a framework that can provide a genuine alternative for these companies, and through engagement with key stakeholders and Opposition Members we are now in a position to bring forward an effective alternative for the rescue of small and micro businesses. I take this opportunity to commend the extraordinary effort of our public servants, who responded swiftly to the evolving challenges posed by the global pandemic. This legislation is a testament to that, and I commend the officials in my Department working in this area on their dedication and hard work to bring forward this significant legislation to help struggling but viable small businesses that need an opportunity to restructure. As we reopen the economy, I want these businesses to know that this Government is committed to supporting their long-term viability, and I want their employees to know that we are committed to supporting their jobs. To that end, we must have an appropriate regulatory response not simply planned but actually in place and available to small businesses, one which supports fundamentally viable companies to continue to trade, to get themselves back on their feet and to preserve employment.

I remind Deputies that it is our responsibility to ensure that this essential rescue process is implemented in time to make a difference to these companies. It is my hope we can have this legislation enacted before the summer recess. I hope Deputies will appreciate the difficulties inherent in trying to strike what is at times a delicate balance between the respective rights of companies and creditors. More importantly, I believe the balance struck in the Bill is fair for all concerned. I look forward to hearing the views of Deputies and to working with them to progress this important legislation as quickly as possible through both Houses. I am proud to commend the Bill to the House.

1:35 pm

Photo of Louise O'ReillyLouise O'Reilly (Dublin Fingal, Sinn Fein)
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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.

1:45 pm

Photo of Ruairi Ó MurchúRuairi Ó Murchú (Louth, Sinn Fein)
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We all welcome the legislation to establish the small company administrative rescue process. We acknowledge the need for the system to be streamlined. As Deputy O'Reilly said, the big issues are speed and cost. The Bill provides for examinership-lite to give viable micro and small businesses whatever is needed to ensure they survive. That is why in recent times the State has provided business supports such as the EWSS, the TWSS before that and the CRSS. Particular issues arose when businesses fell between two stools. It appears the small business assistance scheme for Covid, SBASC, and the business resumption support scheme, BRSS, will deal with some of these issues for companies that do not have rateable premises. That is very welcome. This was a particular issue for taxi drivers and businesses in tourism. Hospitality has also been under severe pressure and has not been given great news this week. We need to ensure we can maintain as many businesses and jobs as possible in future. That is vital.

I agree with Deputy O'Reilly that we need to ensure there is protection in place for creditors and, in particular, workers. Liquidations have been a major issue in the past while. We need to find solutions because they are necessary. There is a long sordid history of not protecting workers, from Clerys to Debenhams. As Deputy O'Reilly said, the list is long and we need to deal with this matter.

On viability and the survival of companies, it would be remiss of me not to raise the public liability insurance crisis at this time. I worked with my predecessor, Deputy Gerry Adams, with a company in Dundalk which approached us after its public liability insurance premium went through the roof. The company had come up with possible solutions for the leisure industry specifically but also for community centres and so on. We met the then Minister of State, Mr. Michael D'Arcy, and I followed up on the issue with the Ministers of State, Deputies Fleming and English. I thank them for their interaction on the matter.

I recognise that moves are being made in areas such as perjury legislation and the duty of care where personal responsibility has to come into play. I and many other Deputies have been dealing with companies which have been put under the cosh by Covid and public liability insurance. It has reached the stage that a community centre in Blackrock, Dundalk, was charged a premium of €11,000. To give credit to the local community and the community centre, the money was raised online through a GoFundMe-type campaign. This approach is not viable. It is ridiculous that these premiums have to be paid through charity and community support. No entity can continue like that. The community centre in question previously paid a public liability insurance premium of €3,000, so the premium jumped by €8,000. People bring claims cases and I will not get into the ins and outs of those. Sometimes a case arises from an event or a company may have been providing material. A particular organisation may have had a greater level of involvement, to the extent that a claim might never land directly at the door of the community centre. Unfortunately, however, the €11,000 charge for the premium has landed at its door.

In many cases, insurance companies do not go to court because they generally do not think it is worth their while to do so. This creates the difficulties we have now.

We all recognise that the new guidelines on payments are positive. We would like to think they will lead to a reduction in the amount people must pay in premiums, especially for motor insurance. However, we have a specific problem with public liability insurance. I have received multiple submissions on the issue. A community organisation very close to home has possession of a very small piece of ground. Previously, it paid public liability insurance of approximately €600 or €800 a year at its most expensive, but the amount involved has jumped to €3,000. This crisis will impact on the community and voluntary sector, individual organisations and a large number of businesses. It is just not viable. I am aware that the Government has engaged in discussions with some insurance companies. We have an insufficient number of underwriters for public liability insurance. However, we are at a crisis level and we must ensure a solution is found.

I would welcome an update from the Minister of State on where those discussions are with other underwriters and what solutions there are for the community and voluntary sector and the organisations I mentioned. Some of the issues I have been dealing with concern guidelines and licensing for community centres and certain aspects of the leisure industry. The aim is that we introduce best practice and reduce the chance of an accident happening. At the same time, we need Government action to ensure that we have more underwriters in the field and that we reduce the chance of spurious claims. We must happen as soon as possible.

I have already given my support for the direction that has been given regarding the legislation. It is necessary, but we must ensure the viability of the business sector and it will be impossible to do it even post-Covid, when we get beyond the point of needing to provide supports, if we do not deal with the public liability insurance crisis.

1:55 pm

Photo of Aodhán Ó RíordáinAodhán Ó Ríordáin (Dublin Bay North, Labour)
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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.

Photo of Catherine MurphyCatherine Murphy (Kildare North, Social Democrats)
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This Bill is intended to provide a rescue mechanism for small and micro businesses facing difficulties. The situation has been exacerbated by the pandemic, but it is something that was needed in advance of it. We know that SCARP will be available to all small and micro companies, those which have a turnover of less than €12 million, a balance sheet of less than €6 million, and where the number of employees does not exceed 50. This covers 95% of companies in Ireland. It has already been stated that it involves 788,000 workers, so it is very significant in terms of the number of people it impacts.

The need for a similar scheme to examinership was highlighted by the Company Law Review Group in 2012, and every Government since has promised to deal with this issue. The pandemic has exposed significant weaknesses, and this is just one of them. A significant number of small and medium-sized businesses will collectively be under pressure at the same time. I agree with the previous speaker about the time provided for debating the Bill, which will be going through Committee and Remaining Stages next week.

There is a reason for a lengthy legislative process. It gives time to think, evaluate, consult and to put together amendments. This is not in any way ideal. I understand why the Government needs to get this in place quickly but it is important we put on record how unsatisfactory this is. It could end up producing problems which could be overcome in advance of the legislation being passed.

Examinership was introduced in unique and pretty incredible circumstances. When the Iraqi Republican Guard crossed into Kuwait on 2 August 1990, leading ultimately to the Gulf War, it also triggered a crisis here. Within days, the then Taoiseach and leader of the Minister of State's party, the late Charles Haughey, recalled the Dáil from its summer recess to amend the Companies Act in order to keep one of our largest companies in business, the company being Goodman International. Its assets in Iraq were frozen, leaving it on the hook for €215 million owed by Iraqi customers. It was declared too big to fail and the Companies (Amendment) Act 1990 was rushed through the Dáil in less than a week to create what we know today as examinership. Regardless of the origin story, we know from years of experience with examinership that it does work. It saves jobs and is a vital lifeline for struggling businesses and a successful tool for restructuring.

The problem is that examinership is completely out of reach of the vast majority of businesses in Ireland. Over recent years, the number of companies that enter examinership in Ireland has typically ranged between 15 and 30 annually. Of the nearly 600 Irish businesses that commenced an insolvency process last year, only 5% went through for examinership. Examinership is overseen by the courts from beginning to end and as others have said, is therefore prohibitively expensive for the standard small and micro enterprises, costing as it does between €80,000 and €120,000 at a rough estimate. Companies of that size cannot afford it and possibly would not have the credit to enter the process.

Under the proposed new mechanism, small firms facing insolvency will be able to cut debt with support from a majority of creditors without the costs of a High Court examinership and would be able to it in 70 days. The rescue process being proposed in this Bill is a long overdue and welcome process for small businesses that are facing difficulties. With the limited court involvement, it will hopefully massively reduce the costs involved in what has been described as an examinership-lite process. The estimated costs given for this process are between €20,000 and €50,000. That is a big reduction but is still incredibly expensive for any business, let alone a small business which is in dire straits anyway. Its owners may well think again about whether or not to enter the process. I am not dismissing the importance of it but for many it will not be possible. In the public consultation process for this Bill, was an indication given as to what would be a manageable cost for a small business? Was that something that was discussed? The Minister of State might reference that because it does seem like a great deal of money. Indeed, businesses I have talked to in the past year really do not want to take on debt. They are already struggling and unfortunately I have seen many of them close.

The lack of court involvement is of course conditional on the agreement of the creditors and where agreement is not found, the court involvement kicks in. Experience suggests at least one creditor will object to the rescue plan, forcing the company into court and greatly inflating the cost. I am aware there are safeguards provided in this regard. The rescue process will be commenced by the resolution of directors, rather than an application to court and will be concluded within a shorter period than the existing examinership process. A rescue plan will be drawn up by the process adviser within about 49 days and can be passed with a 60% majority vote from the creditors. A previous contributor talked of further trimming that time period and if that can be done it would be welcome.

Time is of the essence when it comes to putting recovery plans in place. For any restructuring option to work, management needs to act quickly and decisively, with early analysis of the status of the business and engagement with the critical shareholders. In this regard, the Bill provides for a cross-class cramdown of debts, in the name of reducing cost. As I understand it, in the examinership process this means that if one class of creditors votes in favour of the scheme, then the scheme can be presented for approval to the court and can be imposed on other classes of creditors. Will the Minister of State outline exactly how this will work in practice in this rescue process? The Irish Congress of Trade Unions, ICTU, has requested employees be explicitly excluded from any such process. Has consideration been given to this request?

Under section 558R concerning leases, the Bill states the rescue plan or order of the court cannot contain proposals for a reduction in rent. Obviously issues with the constitutional right to private property are at play here. This is another reason we must take another look at Article 43 of the Constitution. For the past ten or 12 years, we have had many complaints about upward-only rent reviews that drove rents very high without the prospect of their being reduced. One must ask about the common good here. This is just another instance that merits that article being examined further and possibly going to a referendum.

The Small Firms Association, SFA, has pointed out the largest risk of insolvency comes as the result of onerous contracts, particularly leases with rent exceeding market rents. This will be particularly important in the aftermath of the pandemic when it can be estimated that some categories of property rent may fall as less fortunate businesses close up. This might put existing businesses, which may be struggling with extortionate rents, at a major disadvantage to new entrants to the market, as well as larger companies who have availed of the examinership process. One of the most valuable features of examinership is the facility to repudiate onerous contracts, including leases at above-market rents. When faced with the alternative of repudiation, most landlords will agree to reduce rents to market levels. The new process will offer little respite to these businesses if they cannot exit unaffordable leases that are at above-market rents.

There is another ethical issue that arises here. I commend the owner of the George's Street Arcade, who showed great leadership in how the tenants of the units there were treated during the pandemic. It is the kind of thing that would make me want to shop in that type of location. Public sentiment will appreciate that sort of ethical approach. While one could not make that appeal to many landlords, there will be some who feel that kind of sentiment would be valuable. We should not dismiss that as something that may be possible in terms of people being very public about how they have treated their tenants. The public will appreciate it and it may be a badge of honour some businesses can wear. Many businesses will be in rent arrears or will have made agreements to defer payments and many landlords want to be paid rent and service charges in full from the date of reopening.

There is a need for tenants to be able to agree meaningful arrangements related to high rents in order to sustain businesses since cash flow has plummeted. The current High Court list is full of disputes between retailers and landlords. A number of business lobby groups, including Retail Excellence Ireland, have called on the Government to put in place a formal arbitration process for rent disputes. I would happily support that as it would make sense.

The Company Law Review Group report states that some members of the sub-committee felt repudiation was too complex an issue to be dealt with in a simplified process aimed at smaller companies, while others felt that repudiation should be available where it is necessary to ensure the survival of a company. It seems glib to suggest that repudiation is too complex for the 98% of companies for which the new process is designed. The alternative is to preserve a situation where repudiation is reserved for larger businesses that can use it to gain a competitive advantage over smaller competitors. The variety in our town and city centres is something that we want to try to re-establish. There is a cumulative advantage in doing that. It is important that small businesses that give a distinctive flavour of our towns and cities survive as much as they can. They are likely to be the companies most under pressure and they will have fewer options available to remain viable.

Without significant change, the proposed procedures are unlikely to be a viable alternative to liquidation for companies that face problems with rents. The proposed legislation will allow a rescue scheme for creditors to vote on. In many cases where landlords are the largest creditor, that could give them a power of veto. Perhaps I am wrong about that and the Minister of State might refer to that point when he is summing up.

The Governor of the Central Bank has stated that many businesses will fail as business supports are withdrawn. Banks and non-bank lenders have been warned to support viable businesses and engage with borrowers proactively. There is a serious lack of competition for SME lending now that Ulster Bank has exited the sector. Larger SMEs in particular may wish to and have used multiple banks in the past. That is a new dynamic. Banks need to engage with borrowers that they think need the greatest level of support. While we cannot expect banks to be anything less that pragmatic, there is a need to be flexible and sympathetic and to think about the long-term future of those businesses. If we are looking for a job-rich recovery and if we consider the number of people employed in this sector, any supports that keep viable businesses going will be essential to the broader recovery.

A paper published in April by the Central Bank and the ESRI showed that more than 30% of Irish SMEs recorded a loss in 2020, while a further 30% just broke even. Some 5% of the businesses that made a loss last year were already struggling before the pandemic hit, while almost 20% of those that made a loss in 2020 were merely breaking even before Covid-19 hit, making them more vulnerable to liquidation. There will be a variety of situations. Many would be newer businesses which are just starting to establish and maybe like is not being compared with like, since others may own the premises and rents would not be an issue. They may have a difficulty with the banks in making sure that mortgage payments can be restructured.

In contrast, the report showed that 42% of the SMEs that struggled last year were profitable in 2019, before the pandemic, showing a promising sign of their ability to trade back to viability. In the first quarter of this year, the number of companies entering liquidation fell by two thirds compared with last year. It is probably due to directors being reluctant to begin insolvency procedures while Government intervention keeps them afloat. In the normal life of a business, every single one will experience ups and downs but the pandemic has put unprecedented obstacles in the way of small businesses and the true impact of the economic fallout of Covid-19 is not yet known.

When dealing with struggling businesses, our first instinct has to be to identify how and whether the company can be saved. The restructuring of businesses saves jobs and saves businesses and should always be the first option considered. Liquidation is the last route for any business and I doubt many want to go down that route. As the Minister of State knows, it costs so much to create new jobs, whether it is done by IDA Ireland, Enterprise Ireland or even local enterprise offices. Retaining those that are viable makes economic sense.

Under this proposed system, Revenue and the Department of Social Protection have the option to opt out on specific grounds, particularly if they feel the process is being abused for tax avoidance reasons. I imagine that ensuring that VAT debts cannot be run up as cash flow would be a concern in this area. I believe there is a similar system in place for personal insolvency arrangements and Revenue has engaged in over 90% of debt restructuring, as the Minister of State said in his opening statement. It is important to recognise that it is needed but we can already see that Revenue has engaged honourably and I hope that this will continue. It is logical to assume that it will take a similar approach here. The main debts of struggling businesses would be owed to Revenue, especially with the tax warehousing scheme offered by Revenue last year. Rents are also an issue. It is essential that the rescue scheme is one that Revenue is willing to engage with in the vast majority of cases and I think it will be.

This Bill also includes a provision to include an employee representative to the five-person committee of inspection for the winding up or liquidation of a business. This is a welcome addition, especially in light of the controversies of Debenhams and Clerys in recent years. It is important to ensure that workers' voices are meaningfully heard and included in these proceedings, and are not outvoted at every turn.

I reiterate that I do not like the idea of this measure being rushed. That is something that should be avoided. There are a number of other areas and one of them, namely, the aviation task force has been referred to in respect of looking at ways to retain jobs on a sectoral basis. I am told that Ryanair is employing cadets who pay a substantial amount of money for training themselves. Pilots who are only paid on the basis of the hours that they fly are now not getting hours. I am told that they are being replaced by newer recruits who have paid for their training. If that is the case, it needs to be considered seriously and quickly because we want to avoid that kind of thing, with the pandemic being used for all the wrong reasons.

2:15 pm

Photo of Matt ShanahanMatt Shanahan (Waterford, Independent)
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The small company administrative rescue process, SCARP, has been proposed. I am a member of the Committee on Enterprise, Trade and Employment and was glad to waive the pre-legislative scrutiny of this Bill because it is important that it be enacted. It applies to small and micro companies, which represent 98% of all companies in Ireland. These companies support almost 800,000 employees in the State. As other Deputies have alluded to, recent Central Bank and ESRI reports have shown the significant pressure that the SME sector is under. When Government supports are reduced, a number of them undoubtedly will have a difficult time of it. The insolvency process that has been proposed would allow a practitioner to act as a process adviser to assist company directors in coming up with a rescue process framework. For people who are unaware, the administrative process in the country to date would generally require an application to the High Court.

This means a minimum expenditure of €100,000 to try to get protection from creditors while company directors seek support. This is not a viable avenue for small businesses. That is why I and other members of the Regional Group are supporting this legislation.

We recognise the process is designed to streamline examinership, allowing communication with creditors and employees, and the proposing of a restructuring plan, including write-downs and write-offs of debt. There is a question with respect to Revenue and how it proposes to deal with historical debt, particularly in light of the warehousing that has been allowed in the last year due to Covid, for example, the warehousing of VAT and Revenue claims. I hope that Revenue will take a proactive stance on this issue. Otherwise, it will be very difficult to find a restructuring process that will work for many small SMEs.

I also raise the question of the treatment of rental agreements and leases, particularly upward-only rental agreements. It has been said that these are protected by the Constitution. I, and others, have seen legal questioning of this, which shows that these agreements are actually not protected by the Constitution. Something will have to be done. It is ridiculous to think that companies will engage in a rescue process in which they are faced with an immediate increase to their rental costs. I applaud the work of ISME in particular with respect to this process - I know the Minister of State has liaised closely with it - in addition to its work on insurance. These are two key areas for the small business sector in getting back on its feet and trying to reduce these significant headwinds.

As I asked the Tánaiste at the enterprise committee the other day, I ask the Minister of State to consider the inclusion of ISME on the labour-employer economic forum. The Tánaiste referenced the fact that IBEC, the Small Firms Association and Chambers Ireland are on it, but this does not represent the full gamut of SME companies. I ask the Minister of State to look at the work ISME has done and to lobby hard for it to be included in this arbitration process. It is very important that the voice of microbusiness is heard in this country.

Members of the Regional Group have supported the recent passing of perjury legislation, which we promoted as a Private Members' Bill and was unanimously accepted by the House. At present, under the proposed small business administrative rescue process, SCARP, legislation, false or misleading statements by a company director are a category 2 offence. I ask the Minister of State to ensure that these offence categories in the new legislation are in line with the recently enacted perjury Bill. As I said, the Regional Group has built upon the fine work of Pádraig Ó Céidigh who promoted this legislation.

On SMEs and microbusiness, I will talk about the macro policy that affects the small business sector. We do a lot of talking in Ireland about micro business and small business and yet we enact large-scale policies that actually reflect what should be happening to macro companies rather than the micros. I am talking about the recent expansion of paternity leave and a sick pay scheme, the discussion on a universal living wage, potential increases to the minimum wage and the increasing regulation coming down the pipes for many businesses. As someone who ran businesses for a long time, I can tell the Minister of State that these are very hard costs to achieve. Everybody would like to pay their employees more and to offer sick pay schemes, pension schemes and all of that, but these are mainly the preserve of large business. Small businesses, micro businesses and family-owned businesses, are not that profitable in the main. I can assure the Minister of State it is often the case that company directors and owners take less remuneration in a year than some of their best employees. We have to look at some of these schemes and what we are proposing around future taxes on employers.

Again, we have the issue of rates, which will come in to play this year, and insurance. Despite the Covid supports in the business space at the moment, many companies have not been trading, especially in the hospitality sector, but continue to have to pay insurance. They are continuing to pay employer insurance, which makes no sense because they are not open. Yet they have no choice because they cannot find an underwriting option outside the one they are in. This, again, is something Government must take up.

I will also talk for a minute about entrepreneurship because I am not sure that many in this House understand the difficulty of trying to start a business, employ people and make it profitable. We do a lot of work in the enterprise space in this country, talking about investment and local enterprise office, LEO, supports and all of that, but at the end of the day it is down to the hard graft of individual promoters to get up and make it happen. For example, if tomorrow you wanted to open a chip ship anywhere in Ireland, the very first thing you would be faced with is finding a suitable premises and location. That will bring you into a rental agreement and no landlord will enter an agreement for less than 12 or, possibly, 18 months. You will have to come up with the fit-out costs yourself. Before you get to trade, you will have to apply for a health certificate. Health inspections and their requirements will probably result in close to €100,000 in set-up costs before a penny is taken. You then have to make sure there is adequate insurance to cover your premises, begin the employment and sales processes and then look at your revenue and try to build it up. All the while you will be faced with rates and demands for employer taxes.

Ireland is fast becoming a non-benign place in which to run a small business. A large number of owners and promoters of small businesses in this country are now approaching 50 and 60 years of age. If they could get out and sell out they would be gone because it is not profitable anymore. The stress we are seeing across the enterprise space is reflecting that. It behoves all of us in this House, as public servants, to understand how well remunerated we are at the expense of many of these people who are hard-pressed, paying taxes and getting very little from the State for it. I welcome the supports the Department of Enterprise, Trade and Employment has provided to small business, namely, the temporary wage subsidy scheme, TWSS, employment wage subsidy scheme, EWSS, and the Covid restrictions support scheme, CRSS. However, we are still going to need further supports, particularly for the hospitality sector, since the deferral of reopening. I again hope this is something Government will look at.

I will also mention the European travel certificate, which is to come into place on 19 July. Anybody looking at the news yesterday would have seen the pandemonium caused in airports in trying to harmonise quick response, QR codes, etc. I ask that whenever we get a travel certificate up and running, we do not emulate what we saw yesterday. We will have a lead-in for this. We must have time to get it right so that whatever travel there will be will happen as easily as possible.

With respect to the announcement today of a working group on antigen screening, I raised the issue of antigen screening with the National Public Health Emergency Team, NPHET, in April or May 2020. We are still talking about implementing it. We are now talking about another body, on the back of two reports on how antigen screen testing will be delivered. We now have the Delta variant and do not have time. We need to start putting some momentum behind these initiatives. On the green certificate, the Tánaiste referenced the other day that, in Europe, it will cover those who are vaccinated, those who have recovered and those who have been recently tested. In this Parliament we now need to look for a green certificate that will take account of antigen tests, so people may have some access to hospitality while they are awaiting vaccination.

With regard to macro policy and political posturing, I will reference a High Court decision to refuse An Taisce leave to appeal a decision on the development of a cheese plant in Belview, Waterford. This project has been held up for more than two years. It was passed by An Bord Pleanála and has had independent reviews and a number of examinations by the Environmental Protection Agency, EPA. The decision to obstruct that project was a policy that was largely built in south Dublin and is essentially, what I would call, political posturing. It is basically trying to make a philosophical political point about the green agenda. It has delayed the dairy and food agri-sector in the south east for two years. Again, Government will have to look at how State-subsidised actors can involve themselves in obstruction of processes that have already been cleared by other regulatory frameworks.

We are facing many challenges in the SME sector. One of the main ones that will come, as soon as supports are reduced, is solvency. As I said, Revenue will have to take a benign look at business. Businesses will find their cost bases are not competitive any more in light of the revenues they will be receiving. Government and the Department of Finance will have to be aware of this. I thank the Tánaiste for recently receiving a Regional Group delegation I led on buying genuinely Irish products, supporting an Irish campaign and for the commitment by Government to start a new buy local campaign in July. This is very important in order to support indigenous food agri-manufacturers, Irish companies and Irish jobs.

I also point out that recruitment is still a major obstacle, believe it or not, as the economy opens up. Government needs to look at the provision of the pandemic unemployment payment, PUP, particularly in lower-paid sectors, which is now acting as a disincentive to re-engaging with employment.

This must be looked at. It is a significant problem. As I said, the Regional Group welcomes this legislation and we hope to see it enacted as soon as possible. We look forward to further support from Government for our critical SMEs and indigenous Irish manufacturing. I hope to see a benign attitude taken by the Department of Finance and Revenue in relation to hard-pressed entrepreneurs and sole traders who are trying to get back on their feet after what has been, and still is, a cataclysmic period of economic uncertainty. I look forward to the support of the Minister of State, Deputy Troy, for that agenda also.

2:35 pm

Photo of Catherine ConnollyCatherine Connolly (Galway West, Independent)
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I remind Members who may be in the Leinster House campus that the debate is moving very quickly. As the speakers for the next slots are not here, I am moving on to the Independent Group.

Photo of Michael FitzmauriceMichael Fitzmaurice (Roscommon-Galway, Independent)
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I welcome the opportunity to speak on this Bill and I support it. It is good that we are shining a little light on small and medium sized businesses around the country. When a person decides to start up a small business in which only he or she or three, four or five other people are to be employed that person is taking a risk. Many people put their houses and their families at risk until such time as the business takes off. We hear a great deal about the supports available for small businesses. At the end of the day, most of them have to get their finance from a bank. In that regard, they are required to have a set of books and a business plan but, generally, they will need securities to get the businesses off the ground. They slog hard and for long hours to get a business up and running. It can take up to three years for a business to get a return. Unfortunately, some fail as well.

In terms of the last 18 months that we have been through, I hope I am wrong, but if some of our SMEs stay closed for much longer I fear for next winter. Many SMEs, in particular those in the hospitality sector, are reliant on summer trade for the income they need to enable them to withstand the winter. Often, a business is workable but one particular creditor might move on it. The new system that is being introduced is a good one. It provides an alternative plan. It is another way of doing the business for our small businesses to keep them going, taking into account assets and liabilities, what is owed and the viability of the business going forward. I welcome that.

Like the previous speaker, I note that a judge makes the final decision. I would appreciate clarification on the position in regard to Revenue debt. For example, is it so many cents in the euro? What happens in the line of Revenue? There is another issue that needs to be looked at, that is, the number of small businesses that are going bust. We have seen enough, especially in Dublin, of what can happen to workers. In fairness to Governments, at one time there was a cushion in place to help the workers. I understand that currently where there is an inability to pay - the Minister of State can correct me on this if I am wrong - the Government steps in. The Minister of State might provide clarification in relation to this sector.

It needs to be recognised that in this country a massive amount of our jobs are created by small and medium sized businesspeople. As stated by the previous speaker, they go through so much rigmarole. We need to change our planning system. There is always someone who will object to everything. Even if one wanted to put a flag out, there would be someone to object to it. We have to get that situation sorted. In fairness to many of the councils throughout the country, it was a good idea to incentivise people to set up a new business 5 km or 10 km from an existing business by way of an exemption from rates for a few years. I recall bringing that up in Galway County Council during my time as a councillor there. We need to make sure the rateable system is fair. There are many small businesses in rural areas. In my area, in the 1980s and the 1990s people from a small farming background had two choices, that is, to emigrate to England or move to Dublin for work or to set up a business. Many people opted for the latter, which is great because they contributed to the local communities and the economy and they created employment. Small businesses are ferociously involved in local communities. It is important to mention that it is not the businesses that take out advertisements on RTÉ or TV3, for which they can pay thousands of euro per minute, that sponsor the local football teams or fundraise for the local community centre or a person in the area who is sick - it is the local business. Local businesses keep giving and they need to be appreciated for that.

My concern in regard to businesses small, medium and large is that we will lose competitiveness. The previous speaker spoke about a shortage of labour. It is true that there is a shortage of labour throughout the country. Not alone that, the theory test and driving licence fiasco is impacting on the agriculture sector. Previously, when a youngster passed a theory test he or she obtained a learner permit and could drive a tractor to bring in silage. There are contractors crying out for help. I know that the Minister of State is well tuned in to the rural areas because he comes from Mullingar. Someone needs to make a decision. There was much talk about the number of driving tests per month being increased from 25,000 to 50,000 but something has hauled that back. I know a young lad who wants to work. As someone once said to me, it would be a different thing if young people did not want to work. The young about whom I am speaking want to work. Yesterday, the young lad arrived at the test centre to take his driver theory test and just before going in he received an email about it on his phone. That is one of the most discouraging things we can do to young people. I ask the Minister of State to please sort out the theory and driving licence systems.

On planning, I welcome the judgment today from Mr. Justice Humphreys. We might be lucky and that will go ahead, but it is important to remember that businesses do not wait. We need to monitor that situation. In many instances, where people are blocked or stopped from creating jobs, they move on. I have previously raised on the record of the Dáil my concern in regard to the price we are paying for electricity. I heard yesterday evening on the news that all of the providers are to increase the price of electricity again. We have had a few amber warnings. I heard today that legislation is to come before the House next week or the following week to provide for a spend of €200 million and to bypass planning to put in place additional generators in Dublin to make sure the lights do not go out for the winter. The Minister of State has a great understanding of the lot of the rural areas. Is it not rather unusual that we are able to bring forth legislation quickly to bypass all planning to enable the installation of these generators so that the lights will not go out in Dublin next winter but we were not able to bring forth emergency legislation to sort out the Bord na Móna problem? The will to do that was not there because the Minister, Deputy Ryan, was not intent on doing it. He was clapping his hands when the jobs in Bord na Móna were being done away with. It is sad that I have to say that, but it is the reality. We have major problems because some plans are being drawn up.

We hear all of this talk about data centres. I went through it yesterday and we had as high a peak in 2010 as we have at the moment but the power was there. We had more than enough power at the time. However, we have since chopped the likes of Shannonbridge, Lanesboro and Moneypoint. It is like putting the cart before the horse. We are ticking the box and telling everyone that we are mighty and that, Jesus, we are the cleanest in the world in what we are doing but, in actual fact, we are costing people their jobs. I talk to people in industry and I can tell the Minister of State that there is great fear among some of the big employers and, indeed, the medium-sized employers in this country about whether we will have power and where we are going as a country. If there is any doubt about that, they will move their jobs to other places. We can tick the box and say we have achieved 80% of this climate target but, in actual fact, a heap of people are unemployed and we have to start paying out social welfare. That is no good. All of this must be balanced. It must be done constructively. Businesses cannot be penalised. The electricity tariff businesses have to pay is ferociously wrong. We need to encourage them and to help them.

The other side to it is that we need to put jobs in sectors such as construction - and I have talked about this before - on a pedestal in a way we never have before. The old technical schools were great at one time. Unfortunately, many of them are now gone. There was a snobby attitude around the country that pipelayers, digger drivers or whatever never bothered their arse going to school. That is not correct. There are people who are gifted with their hands. Others are gifted at computers or nursing. There are people who are gifted at pipelaying, carpentry, blocklaying and stonemasonry. These are arts and skills which we should appreciate. Unfortunately, because of the boom-bang cycle we have had down through the years, people were like swallows. They headed off to wherever the work was. If the work was in Dublin, that was where they went. The next thing was that the work was in England, possibly London. What happened during this last lockdown - and I saw it because I know a lot of people in the sector - is that England kept going and a lot of the machine drivers headed there. This has a knock-on effect and, unfortunately, if one cannot get people to do the work, the work slows down. We can blame governments, builders or anyone else in the world in this big debate on housing but, at the end of the day, if we do not have enough people with the right skill set, we can throw all the money we want at a project but it will not get done. We need to watch these things.

I ask the Minister for Further and Higher Education, Research, Innovation and Science to work with businesses. There are a lot of areas in which we could have apprenticeships. In Germany, there are 320 types of apprenticeship. Norway has 480 different types of apprenticeships. These mean that people do not have to go to college for three or four years, having a good old bit of craic. We need to look at courses to see how we can adapt them towards people working with a business for a while before going back to college for a while and striking a fine balance between the two. Employers taking on people are also genuinely worried that, having put resources into someone, that person can then leave. If an employer puts resources into somebody, there should be a year or two or three of payback. There should be some sort of a system so that it is not somebody else who gets the great benefit out of the money the employer has invested in somebody. I ask the Minister of State to consider that.

The electricity issue needs to be addressed in a big way. I will not harp on all evening. I know the Ceann Comhairle wants to head for the hills. In fairness, I welcome the Bill in general and I will support it. That is all I have to say.

2:45 pm

Photo of Seán Ó FearghaílSeán Ó Fearghaíl (Ceann Comhairle; Kildare South, Ceann Comhairle)
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I could listen to Deputy Fitzmaurice for hours. Nobody else is offering so I invite the Minister of State to respond to the debate.

Photo of Robert TroyRobert Troy (Longford-Westmeath, Fianna Fail)
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I thank the various Members of the Dáil for contributing to the debate, which has been largely positive. I again thank those Members who sit on the Oireachtas committee that facilitated the waiving of pre-legislative scrutiny, enabling us to bring this Bill to the Dáil before the summer recess.

I acknowledge that Deputy O'Reilly had to leave but I will reply to some of the questions she raised. She mentioned the issue of costs. The costs will depend on whether any element of an application has to be referred to court. The Bill also requires that process advisers' fees be notified to the directors of a company in advance of the appointment of a process adviser. The fees are also notified to the creditors of a company as part of the provision of information concerning proposed rescue assistance. The creditors are entitled to question this and to object to any part of the plan, including the process adviser's fees. Protection is, therefore, secured.

Regarding whether a plan can be produced more quickly than within the 49 days specified, I do not believe it can because there are minimum requirements for notice during the various stages of the plan's preparation. If the required notice for each stage is given, there are only two weeks left at the end for the process adviser to bring forward a restructuring plan. To be fair, an adviser would need that time. That is the reason the time limit was set at 49 days.

With regard to virtual meetings, the Deputy may have missed it but there is an amendment included which allows virtual meetings to take place. With regard to liquidations, the Department is working on guidance for employees which will explain, in plain English, their entitlements with regard to redundancy and liquidations as part of the plan of action, to which the Irish Congress of Trade Unions has signed up. That will make sure that people can navigate this technical area and access the information they need. Reference was also made to the Duffy Cahill report. As I have said, a plan of action has been established and this is being supported by the Irish Congress of Trade Unions. As Deputy Catherine Murphy acknowledged, there are some minor amendments with regard to enhanced information and ensuring that employees can sit on that governing body. That is being addressed as part of this Bill.

Deputy Ó Murchú raised some of the same issues as Deputy O'Reilly but he also highlighted the issue of insurance. I agree with him wholeheartedly. It is an issue on which I was very vocal when I was on the far side of the House. To be fair, a lot of work has been done on this issue over the last 12 months. The judicial guidelines have been implemented. As the Minister of State with responsibility for the Personal Injuries Assessment Board, PIAB, I will say that, in the period since the guidelines were introduced, some 540 cases have been adjudicated by PIAB and there has been an average reduction of in excess of 50% in the awards being issued. In some instances, the reduction has been as high as 74%. The action plan on insurance reform will go to Cabinet before the summer recess and an outline of every action point, and where we are with it, will be given.

I thank the Deputy for acknowledging the small business aid scheme. The Minister of State, Deputy English, and I spearheaded that in the Department to ensure that businesses that inadvertently fell through the cracks were protected. I am glad that scheme seems to be working pretty well.

A couple of Deputies mentioned the perjury legislation. I, too, will mention the former Senator, Pádraig Ó Céidigh, who was instrumental in ensuring that legislation was enacted. He deserves acknowledgment for that. The Government was happy to ensure this was enacted a number of weeks ago.

I do not and cannot accept the criticism that this legislation is rushed. It was examined by the Company Law Review Group, CLRG. Some 12 months ago, we asked it to examine this as part of a programme of work and it did so. People involved in that process included practitioners, businesses, unions and academics. Subsequent to that, a lot of work was done by the officials in my Department and the Office of the Attorney General. Subsequent to that, we went out for public consultation. We got 17 substantive submissions on this legislation.

Work continued on ensuring that the legislation was robust and constitutionally sound. The Bill is not totally new. It is based on existing law. We are simply streamlining existing law and no one will be any less protected.

It is interesting to note that Deputy Catherine Murphy complimented the examinership process that was done over a period of a week when the Dáil returned from recess. It was okay, internationally recognised and good for the Goodman Group but, after a year's preparation, it is stated that we are rushing a Bill that will give protection to small and micro companies.

(Interruptions).

2:55 pm

Photo of Robert TroyRobert Troy (Longford-Westmeath, Fianna Fail)
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That is what we are doing. After a year, we are bringing through legislation and honouring a commitment to give viable small and micro companies the opportunity to restructure. At least the Deputy sat in for the debate. Deputy Ó Ríordáin was critical of what we are doing and of the time allocated for the debate. He took five of his 20 minutes to contribute and then skipped off and did not participate in it. This is about ensuring small viable companies have the opportunity to enter into restructuring process to protect the company and, more important, the jobs that are dependent on it. I do not take the criticism the Bill is rushed at all.

I thank Deputy Shanahan and the Regional Group of Independents for supporting the Bill. The Deputy mentioned a number of points. One was that ISME should have a place on the labour employer economic forum. I agree with him. I have made that point to the Taoiseach and the Tánaiste and will continue to make it. I also agree on antigen tests and I have continuously said that internally in my party. It is worth nothing that antigen testing is included in the return to work protocol published by our Department in May. It sets out how it can be used in various workplaces. It is being used well in workplaces and it should be rolled out further.

Deputy Shanahan also mentioned the hospitality sector. We were all bitterly disappointed that we had to press the pause button earlier this week but in acknowledgement of the difficulties the sector is experiencing because of that, there are enhanced supports for the next number of weeks, and rightly so. The Taoiseach, the Tánaiste, the Minister for Health, Deputy Stephen Donnelly and the Minister for Tourism, Culture, Arts, Gaeltacht, Sport and Media, Deputy Catherine Martin, met with various representative bodies on Wednesday this week and extensive work is ongoing to come up with practical solutions to help get them open as soon as possible. I have engaged with some representative bodies on that. There is a willingness to come up with solutions but we have to be cognisant of the issue with the new variant and we have to ensure that we protect the overall economy and our health service. I do not think anyone would like to see the health service experiencing the difficulties it experienced in January.

Deputy Fitzmaurice made a number of points. He referred to Revenue debt and was asking, I think, whether it is so many cent in the euro. Every plan will vary but Revenue or any creditor must receive more than if the company went into liquidation. That is in the best interests of creditors. It will vary depending on how the restructure is decided upon.

The Deputy is right about small and microbusinesses. They are the backbone of the economy. A total of 788,000 jobs are in the sector. Any business with fewer than 50 employees and with an annual turnover of less than €12 million can avail of the scheme. Some 98% of companies registered with the Companies Registration Office fall into in that category. That is another reason it is important to get the legislation enacted before the summer recess. Businesses are at risk of failure. Businesses and the stakeholders that engaged in this do not want to see it pushed out any longer than it should be.

Deputy Catherine Murphy had a query on onerous contracts, particularly in the context of leases. This is the same as the examinership process in terms of repudiation and treatment of leases. There are two options. One is similar to examinership and involves going through the court process. The second is to come to a mutual agreement under the supervision of the insolvency practitioner. The Deputy was right to acknowledge George's Street Arcade for the manner in which that landlord engaged with lessees. That was done very publicly but there are many other landlords who have engaged practically and reasonably with lessees because they want to ensure the business survives and continues to trade.

I thank the Ceann Comhairle for facilitating the debate and I thank Deputies for their contributions. I look forward to working with Deputies on Committee and Report Stages. It is urgent that we get this legislation enacted before the summer recess.

Question put and agreed to.