(Limerick East): I am opposing section 2. This section is what the Bill is all about, dissolving Fóir Teoranta, and, therefore, to oppose section 2 is effectively to oppose the Bill. In April 1989 the Minister stated his intention to abolish Fóir Teoranta. At that time he said the company were not required any longer because, first, the new Companies Bill would bring forward procedures which would enable the functions carried out by Fóir Teoranta to be carried out in an alternative manner. Since then we have had the collapse of the Goodman Group. The Dáil was recalled in August and a Chapter of the Companies Bill was introduced as separate legislation. We know now there is a way whereby, following certain procedures, the court can provide an examiner to examine the assets of a company in difficulties. When the examiner has reported, the courts are empowered to allow a company, which on the face of it would be destined for liquidation under the old legislation, to continue to trade themselves out of difficulty.
Already, even though there is very limited experience of the new legislation apart from the Goodman Group of companies and I understand a small textile company, it is quite clear that certain difficulties are arising with it. There are, for example, doubts about the constitutionality of the legislation. Secondly, there are doubts about the cost of the procedure, particularly as it relates to smaller companies. There are so many occasions on which the examiner can return to court that there is a doubt whether what is effective legislation theoretically will in practice be of benefit for the rescue of small companies. There is a school of thought in the accountancy profession which suggests that such a dent will be made in the assets of a small company by the involved legal procedures in the appointment of an examiner, his reporting to the courts and making recommendations, they will be whittled away in the attempt to rescue it.
I intend, in the course of Committee Stage of the Companies Bill to raise this matter. I received correspondence recently which I would like to draw to the Minister's attention. It relates to a company in one of the Border counties which went into liquidation in 1984. The liquidators have now brought in their final report and are to distribute the assets. After the liquidators finished, out of assets of £59,000, there is only £13,000 left to distribute to creditors. When, under fairly straight-forward procedures involving liquidation, a major firm of accountants in this city can be called in and whittle £59,000 of assets down to £13,000, leaving the unfortunate creditors with less than one-quarter of the assets at the time the company got into difficulty, is it any wonder there are doubts about the Companies Bill introduced in August, with the involved legal procedure of an examiner having recourse to the High Court on so many occasions before he can bring in his report?
I draw attention to these facts because the major plank on which the Minister based his decision to abolish Fóir Teoranta was that they would no longer be necessary when the new Companies Bill was on the Statute Book. The Minister referred to that Chapter of the Companies Bill which is now law as a result of the emergency recall of the Dáil in August arising out of the Goodman affair. We know that that legislation, and the procedure which has been referred to in the debate as being along the lines of Chapter 11 legislation in the United States, is not an effective substitute for the activity carried out by Fóir Teoranta over so many years which resulted in the saving of many companies and thousands of jobs.
The Minister also on that occasion said there was now no great pressure on companies because interest rates have come down. Of course interest rates had come down in April 1989 but they shortly went back up again.