Seán Sherlock (Cork East, Labour) | Oireachtas source

I will not be accepting this amendment, which proposes the insertion of a new subsection (3) into section 2. However, the latter amends sections 2 to 4, inclusive, of the Companies (Amendment) Act 1990. The addition of a further subsection to section 2, unrelated to any specified section of the 1990 Act, is not legally sound and would not achieve what is intended. Nor is the wording which refers to the operation of this amendment sound. The Company Law Review Group, in its report on examinership, recommended increasing the jurisdiction of the Circuit Court for examinership in respect of small private companies. The business organisations represented on the group - IBEC, ISME and SFA - were all supportive of this proposal. The report highlights the costs associated with the High Court procedure as a reason many SMEs do not currently avail of examinership.

It is not possible, as a result of the number of variables attaching to the examinership process, to quantify estimates of the savings which might accrue. For example, there may be different levels of legal representation in different cases. In addition, the number of applications to the court during the examinership process may - depending on the complexities involved - vary between cases. In every examinership there are two essential hearings before the court. The first of these relates to seeking the appointment of the examiner and the second to seeking confirmation of his or her report in which he or she will set out his or her proposals for a compromise or scheme of arrangement. There may also be a need for a hearing in order that creditors might have their say before the appointment of an interim examiner is confirmed. However, in the course of the examinership - and depending of the complexity of the circumstances in a particular case - there may be a need for the examiner to seek either direction from the court on various issues or permission to exercise certain powers. It is, therefore, impossible to estimate the number of occasions on which there will be recourse to the court during an examinership.

There is no typical examinership. The level of legal and other costs will be determined by the simplicity or complexity of a particular case. In light of the findings of the Company Law Review Group to the effect that "in the form currently available to small private companies (SPCs), is inadequate by reason of the costs involved which are prohibitive" and the acknowledgement that examinership is generally not a possibility for such companies because of the costs associated with the High Court procedure, it would be very difficult, if not impossible, to establish a base from which to measure future cost savings for other small companies arising from the use of the Circuit Court route instead.

There is no existing group which can be used for comparative purposes. Attempting to compare the costs relating to an examinership in the High Court in respect of a larger company with the possible costs for a small company in the Circuit Court would not be a meaningful exercise. There is no standard or comparator against which assessment can be made. Furthermore, the data relating to the cost of an examinership may not be publicly available and would need to be sourced from companies. This would impose an additional administrative burden on companies, which could not be compelled to provide the necessary information without the introduction of legislation. The Senator's amendment does address this particular issue. It is not unreasonable to assume, however, that taking an examinership case in the Circuit Court should be less costly than doing so in the High Court, particularly as the legal costs relating to the former and lower than those which obtain in respect of the latter. Access should also be improved by the proximity of the Circuit Court to the companies seeking to avail of the examinership process. There may also be less of a need to resort to the court during the examinership process if a particular case is less complex.

These are all factors which should result in lower costs for small companies using the examinership process in the future.

However, in the absence of data on the costs currently incurred by small companies in the examinership process because they do not seek examinership, it would be less than robust to attempt to estimate savings by a comparison of speculative costs in an unused High Court process and the proposed Circuit Court process given the variables I have outlined. I assure the Senator that we have given this matter consideration and studied his contribution on a similar amendment on Committee Stage. I have outlined all of the difficulties that arise in attempting to calculate savings that would accrue under this proposal.

On a general level, I remind Senators that Government policy on business is to provide for an operating environment in which obstacles that could impede its development are removed, where possible, and it is encouraged to develop and flourish. The proposal before us is firmly located in this category. The granting of the possibility of direct access to the Circuit Court to small business in the manner proposed offers businesses the opportunity to restructure their affairs and return to an even keel at a cost that is likely to prove more affordable than being required to take the High Court route. This is, therefore, an intrinsically laudable proposal and on that basis alone, it merits the support of the House.

With respect to Senator Barrett, I cannot help but feel that his proposed amendment has overtones of a measure to police legal costs. I do not consider that a company law measure such as this is the appropriate medium in which to pursue such an objective. Perhaps he will consider approaching the Minister for Justice and Equality on the issue as the amendment is not appropriate to the legislation before the House. On that basis, and with respect, I do not propose to accept it.