Aideen Hayden (Labour) | Oireachtas source

Like other speakers, I welcome the Minister of State, Deputy Kathleen Lynch. She is a woman with many talents which extend beyond her ministerial remit. I look forward to reviewing the Companies (Miscellaneous Provisions) Bill 2012. The legislation is long overdue and vital in terms of having a robust company legal structure. I understand the complexities and that it will be 2014 before we can bring the legislation to fruition. I welcome the decision of the Government to bring forward certain provisions of the Bill for practical reasons. I refer, in particular, to the provision whereby small private companies can apply to the Circuit Court for what has loosely been called examinership-lite. The Bill is trying to facilitate low-cost Circuit Court examinership for small businesses. The examinership process can only be accessed through the Circuit Court. I have heard many estimates of the cost of appearing in the High Court for one day and it extends to between €15,000 and €30,000. It is an expensive process.

This is an important day to have the debate. I was struck by the fact that Pamela Scott, a company that exited examinership in May, had opened its fourth new shop on Henry Street. One of the directors of the parent company, Flairline Fashions Limited, noted that it had entered examinership because of the need to bring its cost structure to a sustainable level. Examinership was obviously very successful but also a very expensive process. The director said he welcomed a cheaper, faster option for smaller companies. That is what we are trying to achieve.

In understanding what examinership is about I emphasise that we are talking about small companies the creditors of which are other smaller companies. It is important not to prioritise one category of business to the detriment of another. It is important to emphasise that examinership is a process whereby a company must establish its viability. We are not giving a blanket to a business with no prospect of survival, where granting examinership will only bring other small creditors and businesses to their knees. We are trying to make available to smaller companies a process that has been very effective.

I thank the Library and Research Service for the digest it has prepared on the Bill. I was struck by the statistics for examinership for the period 2008 to 2012. Of the companies that went into examinership, over 50% returned to normal status and are operating as normal. In the period 2008 to 2012 very few companies went into liquidation and a reducing number are still in examinership. We are not talking about an unproven process but one that has been well received by Irish companies. We must acknowledge that one of the significant disadvantages of the process is the cost. There was a commitment in the programme for Government to introduce a legally binding voluntary commercial debt plan structure to allow small businesses to restructure debts without recourse to expensive court procedures. It is important to ask why we did not do this and why we did not go down the non-judicial route rather than working within the court structure.

It is important to acknowledge the work of the Company Law Review Group which in 2012 published a report on reducing the cost of rescuing viable small private companies. It advice to the Government was that, given that the non-judicial processes available were evolving, having the insolvency service involved in the process administratively was not something it recommended. In contrast, it recommended using the Circuit Court as a means of providing recourse for small companies.

It was concluded that there was no reason the envisaged changes could not be proceeded with through the Circuit Court.

Anything that the Government puts forward should be subject to review, and I am aware that although many people have welcomed this proposal, others have questioned whether it would bring about the savings we are trying to achieve or the viability we would like to see for small private companies. I ask that the following matters be kept under review in this process. After a particular period there should be a review, as enshrined in either the legislation or our own minds, to see if the Circuit Court is delivering for small, private companies what we hope it will. I am very concerned that costs should be kept under review as there have been a number of arguments that legal costs will not determine whether the process will be successful. I am also very concerned about keeping the prospect of a non-judicial option under review, including the capacity of the Insolvency Service of Ireland, and particularly its evolving expertise in insolvency that is being rolled out pertaining to personal insolvency rather than commercial and business insolvency. Its capacity to deal on a non-judicial basis should be kept under review.

As a solicitor I have had personal experience of people going through the examinership procedure. There is much expertise within the High Court relating to establishing whether companies have the capacity to remain viable, and I wonder how we can ensure the Circuit Court can be geared to the same function and, as the Company Law Review Group has indicated, is properly resourced to ensure it is capable of delivering this service.

Fortunately, we are exiting a tough time in Ireland, and there is good reason to believe that we are seeing more than green shoots. Many of our export companies are small private companies and 80% of them are predicting that they will expand their businesses quite significantly over the next period. As Senator Barrett has noted, we cannot because we are seeing green shoots walk away from change and what went wrong in the past. We cannot put these issues behind us. This country will have to consider why bodies such as accountancy experts, for example, did not deliver the kind of service they should have for the country.

I welcome what has been proposed but it must be kept under review. We must look back after two years to see if the Circuit Court is delivering what we would like it to for the country.