Deirdre Clune (Fine Gael) | Oireachtas source

I welcome the proactive approach that the Department has taken in preparing this Bill by taking a small number of measures out of the main companies legislation and fast-tracking them in order to help the many small businesses that are in trouble. The Bill is aimed at small businesses with balance sheets smaller than €4.4 million, turnover not greater than €8.8 million and fewer than 50 employees. This sector is facing a difficult trading and economic environment at present. Their stories have been well aired. The examinership provisions will allow cases to transfer to the Circuit Court, thereby making it easier for small businesses to access this type of solution. The Bill will help viable businesses that have the potential to survive by giving them breathing space and putting them into an examinership process so that a solution can be worked out. They will have space from their creditors. Currently the only option for companies is examinership in the High Court, which is an expensive process.

The Companies (Amendment) Act 1990 introduced the current law on examinership under the High Court. The process currently requires a high level of court involvement and can be complex and lengthy. The Department of Justice and Equality has estimated that Circuit Court costs will be 30% lower. It will be interesting to see the impact on businesses. Section 279 of the Companies Act 1963 allow companies to restructure with their creditors or stakeholders under court supervision, but that provision has rarely been used. Individuals can become bankrupt but companies cannot under the Bankruptcy Act 1988. The introduction of the insolvency schemes will make a difference in this regard. The programme for Government stated that legally binding and voluntary debt measures under the supervision of an insolvency expert would be introduced to allow for non-judicial resolutions of debt. The Company Law Review Group stated: "[S]ubject to establishing that the Circuit Court has the necessary resources available to it and the policy agreement of the Department of Justice, the Review Group believes that there is no other reason why the changes proposed to permit all SPCs to bring application directly to the Circuit Court cannot be quickly progressed."

Our focus should be on protecting jobs. A receivership or insolvency arrangement will not prioritise jobs in the same way that an examinership can. There are approximately 200,000 small businesses, employing 650,000 people, in Ireland. Some of them have the potential to survive and this is what the examinership process will establish. Figures from Hughes Blake on High Court examinerships for SMEs show that 716 SME jobs have been saved in the first three quarters of this year alone. Companies that have made media headlines for successfully exiting receivership in recent months include Trifix Forklift in Kildare and Dublin Gazette Newspapers. Barna Waste managed to save 270 jobs when it emerged from examinership. The examinership process plays an important role in saving jobs.

Small family businesses tend to have a strong business sense, a good track record and loyal customer support but, for various reasons, many of them are in difficulty. They may have been involved in property or they may face a difficult trading situation. They need to be supported in their return to the point at which they can once again become viable businesses that employ people.

The new process has been welcomed by Retail Excellence Ireland and the Small Firms Association. There is an acknowledgement, at the same time, that for some small businesses it might be coming too late. Nevertheless, we need to move forward, and what is proposed here is supported by most business people. The data show that three out of four examinerships are successful. Companies that get to that point have generally tried everything. They have considered selling non-core assets, examined their cost base, restructured debt and payments and sought more credit from creditors. For many, however, all of that is not enough and they need access to the examinership process.

Leases and high rents are an issue for many businesses. In that regard, the recent decision by the Property Services Regulatory Authority to put its commercial lease database online is most welcome because it gives us an idea of exactly what is happening out there. I was interested to note that only one lease has been issued on Grafton Street since 2010 and only two on Henry Street, which is the busiest shopping street in the country. Elsewhere in the State, no leases have issued on Patrick Street in Cork, as the Minister of State will be aware, or in Galway. It is estimated that 45 Grafton Street is now seeking a rent of €305,000 annually, compared with an estimated €445,000 some years ago. The former HMV business on the same street is now being let to Massimo Dutti, a subsidiary of Zara and a very popular retail outlet. At the height of the boom the rent charged on that premises was estimated at €1.7 million; now we are hearing a figure of €865,000. It seems that sense is finally prevailing in this area. There is no doubt that crippling rents were a major factor in significant numbers of viable businesses going under.

I also welcome the Bill's provision for the simplification of the process of e-filing and the disclosure of information to the Office of the Director of Corporate Enforcement under section 5 of the Company Law Enforcement Act 2001. As it stands, there is no obligation to disclose information to that office. That change is welcome and will give useful additional powers to the director.

The Bill also deals with the issue of statutory audits. There was a very useful discussion on this issue at the Joint Committee on Jobs, Enterprise and Innovation, of which I am a member, at the end of last year. The chairman of the Irish Auditing and Accounting Supervisory Authority, IAASA, raised the question of whether there is a need for direct regulation of the auditors of private interest entities. That discussion came against a background of developments in the area of audit reform at a European level, as the Minister of State mentioned. We must ensure we have independent auditing of our accounting services. We must send out a message to people who might choose to invest in this country that company law is being adhered to in a transparent way. That is the driving force behind all these changes.

On the whole, I welcome the Bill. There are advantages for small businesses in having a cheaper and more accessible examinership process. It will remain the case, however, that the courts will need to be satisfied that there is a reasonable prospect of a company's survival. It is all about protecting viable companies. There will always be a number of businesses that fail, and examinership should not be used to prop up such companies. There is a balance to be struck here. In some cases, a successful examinership process will mean a reduction in payments to creditors, which will have a knock-on effect. In general, these provisions are a very welcome development and their fast-tracking is to be commended.