I move amendment No. 1:
In page 5, between lines 11 and 12, to insert the following:
“(3) The Companies (Amendment) Act 1990 is further amended—
(a) in section 29 by amending subsection (4) to read:
“(4) The functions of an examiner should be performed with the maximum use of the services of the staff and facilities of the company to which he has been appointed to assist him in the performance of his functions, save for exceptional circumstances where the assistance of persons appointed or employed by him for that purpose may be used.”,
(b) in section 29(5) by adding the following sentence:
“, to the proviso to subsection (6), to the Court before which the proceedings is brought, to the value of the work done for the company, its employees, secured creditors and unsecured creditors.”,
(c) in section 29 by adding the following subsection (6) after subsection (5):
“(6) A nominated examiner must provide an estimate of the remuneration, costs and expenses of the examiner to the Court when presenting the petition.”.”.
I compliment the Minister on choosing to fast-track this element of the overall companies consolidation legislation, which is overdue and needed. I appreciate the urgency the Minister has afforded to this Bill.
I have consulted very widely with the SME sector and particularly with the small number of companies that carry out examinership. We have a very small pool of people with the expertise, and as the Minister knows, it is an extremely costly process. Part of the purpose of the legislation is to try to reduce cost, reduce the jurisdiction, and afford the opportunity to smaller companies to move from the assumed and normal practice of applying for examinership in the High Court and moving it into the Circuit Court. I do not dispute that the likelihood is that by moving the jurisdiction, legal fees can be reduced and can be contained to some extent. The difficulty is that the vast bulk of the cost of examinership is not the legal fees involved but rather the examinership fees themselves. This is proving very off-putting to all companies, especially small and medium-sized companies, in applying for examinership.
The Minister will be well aware of another problem. The majority of small accountancy firms do not have the skillset to carry out examinership which is why such a small pool of people are involved. To highlight the importance of this to the real economy and the Minister's agenda of job creation, 60% of those employed in this country are employed in the indigenous SME sector.
Only 10% are employed by foreign direct investment, FDI, companies. Many people are not aware of that. There is a perception that most employment is generated by the large multinationals. The Minister knows as well as I do that is not the case.
Small businesses are struggling. They face enormous challenges. A RED C survey by the Department of Finance on SME credit gives a very good picture of the challenges facing SMEs: credit demand from SMEs has declined to 36% and 80% of that 36% were granted the credit; and half of SMEs now agree that banks are lending, which is up from 39% this time last year and is a positive sign. There is a sense of confidence emerging. There is a big opportunity for small businesses, particularly those focused on exports and which are trying to expand. The difficulty is that many small businesses are still in financial distress. I recently met with the examiner who deals with 50% of all examinerships in the country. He told me that in his experience 99% of companies in distress do not opt for restructuring through examinership because they do not have the resources. When they meet the examiners, the upfront costs seem too onerous and the expertise does not necessarily exist around the country to help them.
My amendment is very simple and straightforward. It could drive transparency and oblige professional examiners and accountants to set out to the court upon petition the estimated costs of the examinership process. They would be obliged to give an estimated figure for which they would then have to account before the court in the later stages of examinership. It is a very simple amendment, one that I am sure the Minister will be minded to accept because it does not alter the nature of the legislation. It would make it far more effective and user-friendly and would oblige examiners to introduce a much greater degree of transparency in terms of how costs are arrived at and present a much clearer picture of what is involved and how much the examinership process will cost them to companies availing of this process, as is the Minister's intention
The other crucial aspect of the amendment is that it obliges the examiners, other than in exceptional circumstances, to use the professional expertise within the company itself. These are small companies with between 20 and 40 employees, many of which have in-house legal and accounting expertise upon which the examiner can draw. Depending on the examiner and the practices of a particular company it can be but it is not always the case that the examiners already use the professional expertise within a company. My amendment would oblige the examiner to avail of that in-house expertise to avoid bringing in very expensive outside expertise in the form of accountants and so on. This would help to minimise the cost of the examinership process. My amendment provides for an obligation on the examiner to explain to the court, if and when he or she chooses not to use in-house expertise, why he or she has gone outside the company and brought in external, expensive practitioners. This is a very simple and practical change which would improve and enhance the legislation and would certainly keep the costs down for the companies involved which are in distress and ensure that fees and the cost of the overall examinership process are contained, which I think is the Minister's objective and it is certainly mine.
I am very pleased to say that I have been in touch with several of the concerned agencies which represent employers and the companies that are in distress. I have secured the endorsement of retail excellence Ireland, REI, the Irish Small and Medium Enterprises Association, ISME, the Small Firms Association, SFA, and the Restaurants Association of Ireland, all of whom in the past 24 hours have said that they are happy to publicly endorse the amendment I have tabled here today. They see it as a practical way to make this legislation more user-friendly and affordable and to help it achieve its objective, to ensure that companies in financial distress which require restructuring do not wind up or go into liquidation or bankruptcy. Those companies can stay in operation, continue trading and provide jobs.
Earlier this week in an appeal to the Supreme Court a company in Limerick was saved from going bust and because of a successful examinership application, the 33 employees in that company will have their jobs this Christmas and they and their families will not have to go through the distress and trauma of being made redundant two weeks before Christmas. That is a fantastic outcome. I want to see more companies, employees and families protected by the examinership process. That is what this legislation is intended to do and by accepting the amendments that I have laid before the House the Minister can help to enhance the legislation and ensure that it has a better chance of fulfilling that objective.