Éamon Ó Cuív (Galway West, Fianna Fail)
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Question 46: To ask the Minister for Jobs, Enterprise and Innovation when he plans to implement the promise of the programme for Government to allow small businesses to restructure debt without recourse to expensive court proceedings; and the priority that he is affording this matter. [21071/11]

Richard Bruton (Dublin North Central, Fine Gael)
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2057The Government has published a comprehensive programme setting out its goals over the full range of policy concerns. The Government will address this programme over its term of office in a measured and prioritised way.

Sections 201 to 204 of the Companies Act 1963 provide a structure for the negotiation of a scheme of arrangement or compromise between a company and its creditors under the supervision of the court. Upon application being made to the court, section 201 empowers it to order the convening and holding of meetings of creditors or members and, where a majority representing 75% in value at those meetings approves the scheme, the court is empowered to subsequently order that the scheme is binding, even on dissenting or untraceable members or creditors. The fact that a scheme of arrangement has been approved by the court must be adequately publicised.

The are also existing provisions in relation to examinership, and these are contained primarily in the Companies (Amendment) Act 1990. The fundamental principle of the examinership mechanism is that it offers protection for a short period to a company which is considered by the court to have a "reasonable prospect of survival". I would stress the importance of this test - the remedy of examinership is only intended to be availed of by a company which has a reasonable prospect of continuing on an ongoing basis after the examinership, and which has an underlying sound business model to continue.

In addition, it is already the case that, under private contract law, creditors and debtors can agree to restructure their debts on a voluntary basis, without recourse to the courts. Such arrangements can also be legally binding.

In determining the scope for any possible extension of the provisions which I have outlined above, it will be necessary to assess the proper role of the courts, and the need to respect the interests of preferential creditors and of small creditors. I will consider these aspects carefully in determining how best to proceed.

I have recently met with interests advocating a new form of "Company Voluntary Arrangement", or "CVA", which is based on the comparable model which exists under U.K. law. I will reflect on the suggestions which have been made in this context as part of my overall consideration of the matter.

Finally, I remain open to any suggestions that could improve the effectiveness of the process.