Dáil Éireann debate -
Tuesday, 4 Feb 2014

Vol. 829 No. 1

Companies (Amendment) Bill 2014: Second Stage [Private Members]

Deputy Stephen S. Donnelly

I move: "That the Bill be now read a Second Time."

I will share time with Deputies Finian McGrath and Catherine Murphy.

I am delighted to have the opportunity to introduce Second Stage of the Bill. I thank Mr. Ross Maguire, SC, and Mr. Barry Lyons, solicitor, for all of their work and expertise in drafting the Bill. I also thank the officials of the Bills Office for their Trojan work in helping me and the team last week in getting the Bill ready. I thank the Minister for Jobs, Enterprise and Innovation, Deputy Richard Bruton, and his officials for their time and expertise in recent weeks. I also thank in advance my fellow Deputies who will contribute to the debate today and tomorrow for the time and effort they are putting in.

The Companies (Amendment) Bill 2014 seeks to radically improve Ireland's examinership process. It would reduce the costs and bureaucracy of examinership and its refinancing requirements. It would address the legacy issue of upward-only rent reviews. In doing all of this, it would for the first time make examinership a real option in Ireland for viable but insolvent small and medium-sized enterprises. If passed, it has the potential to save thousands of companies and tens of thousands of jobs in the coming years. This is not wishful thinking. The solicitor with whom I worked in preparing the Bill has handled more than half of all examinerships in Ireland in the past 12 years. The senior counsel with whom I worked in preparing the Bill has significant experience in insolvency law.

The process described in the Bill and the changes it seeks to make specifically address what is not working in examinership and proposes a better solution. That said, I do not present the Bill as a finished article and have no doubt it can be improved through the legislative process. If the Minister believes there are constitutional issues to be teased out, let us do so through the legislative process. If the Bill is accepted by the Government on Second Stage and passed tomorrow, we will have a structure and momentum to turn the examinership process into something which will provide a second chance for viable businesses throughout the country.

Examinership is a complicated process and I would like to use a real-life example to illustrate the problem and opportunity the Bill addresses. Recently I met the owner of a family-run business in Wicklow. The company manufactures for the domestic and international markets. Its exports have been growing steadily in recent years and it has been particularly successful exporting to the United Kingdom. It employs approximately 20 people and as it grows, it continues to hire more workers. It is profitable but, critically, it is insolvent for the following reason. One creditor in the United Kingdom which bought and received a large quantity of product went into liquidation. As a result, this profitable, growing, export-oriented company finds itself with a large hole in its profit and loss account and cannot continue to cover all of its costs. In short, it is insolvent.

What options are available to the company? The first is that it can enter voluntary liquidation. In this case it would be shut down, the staff made redundant, the assets sold and the creditors paid some percentage of what they were owed. In short, everybody would lose. The staff would lose their jobs, their families would lose the household income, the shareholders would lose the company, the creditors would only be paid a fraction of what they were owed, the other companies with which the company works would lose a valuable customer and the State would lose corporation tax, income tax and VAT and have 20 more people out of work to support.

The second option is court liquidation. In this case the creditors would apply to the courts for a forced liquidation. This would have all of the same downsides as voluntary liquidation with the additional downside of heavy legal costs for all parties involved. Everyone would lose, but in this case they would all lose a little more and a few lawyers would win a little more.

The third option is receivership. In this case the creditors would appoint receivers for the secured assets. For the company the secured assets are mainly machinery, vehicles and premises which would be sold off, almost certainly at a loss to the creditors. Without these assets the company would not be able to trade, bringing us back to the same destructive outcome as voluntary or forced liquidation.

The fourth option is examinership. According to how examinership is meant to work, an independent accountant would be retained and he or she would review the company's finances and give an opinion on its viability. In the case of this business he or she would almost certainly conclude, based on what I have been told as I have not seen the books, that the company was viable, that the debts should be restructured and that the company was a good candidate for examinership. An examiner would be hired and prepare a court petition seeking examinership protection and the papers would be filed with the courts. Previously they would have been filed with the High Court, but following the Act introduced in December they are now filed with the Circuit Court. Once the papers were filed, the examinership would be advertised and the creditors would find out about the examinership process and come to court. The company directors, the creditors and their lawyers would all appear in court and the judge would decide whether to award protection to the company. In the case of this company I am pretty sure the judge would award protection because it would be an obvious candidate for the examinership process. The court would then give the examiner 70 days to meet all of the interested parties, prepare a survival plan, have it agreed with all of the creditors and, critically and with difficulty in the circumstances, find new investors to refinance the company post-examination. This process could take several trips to court as any one of the parties might dispute various aspects of it. After all of this, if the examiner was successful, all of the parties would return to court for another hearing, at which the plan would be agreed to by the judge and receive court approval. The outcome of this process would be that the company would continue to trade, the employees would keep their jobs and more staff would be hired as the business continued to grow, the companies which trade with the company would retain a valuable customer, the creditors would get back at least as much as they would have through a liquidation or receivership process and the State would continue to receive taxes.

This is a real case in Wicklow and the company has four potential futures, in three of which everybody would lose. In the fourth, examinership, everybody would either win or be no less worse off than they would be in any of the other three. Given all of this, one would expect this profitable family-owned export-oriented company to come through the examinership process and continue to trade, but as the examinership process works under law today, the chances are that it will not. There is every chance it will end up being forced to close.

This is not an isolated case. In the past three years there have been approximately 4,700 insolvencies and only 64 examinerships. There has been one examinership for every 73 insolvencies. The reason there have been so few examinerships relative to the high number of insolvencies is - I am sure the Minister will agree with me - the examinership process does not work. It is completely unfit for purpose.

I will outline five main reasons the current process does not work. The first is that it is too expensive. The people I prepared the Bill with estimate that an examinership currently costs approximately €70,000 and can be as high as €350,000. Most of that, as we know, is for legal fees due to multiple court appearances. I commend the Minister on his Bill from December, which brought the examinership process from the High Court to the Circuit Court. Based on the contributions made by the Minister at the time, my understanding is that the main reason for this is to drive down costs. I voted for the Bill. I support the Bill, and I welcome the move by the Minister.

The second reason examinership does not work is that it is open to abuse by creditors. I am told that in some examinerships, creditors find ways of forcing proceedings back into the court again and again. I am told they do this to make the examinership process so expensive for the company that the directors are forced to abandon the process.

The third reason the examinership process does not work is that the re-financing costs can be too high. As we know, many banks have so-called on-demand clauses in their loans to small and medium enterprises, SMEs. Therefore, during the examinership they can insist on full repayment against their secured asset. In today's credit-constrained world, the companies cannot find the level of finance needed and again, the process can fail.

The fourth reason the examinership process, as constituted today, fails is that landlords are refusing to budge on upward-only rents, although not in all cases. The people who are doing this on the ground are telling me that some landlords are refusing to budge from the artificially high rent, the bubble era rents, even though they know it means that the company in question will be liquidated.

The fifth reason the examinership process does not work in Ireland is that in some cases essential creditors refused to trade without guarantees. If we take the example of a restaurant, food suppliers may not provide the restaurant with any produce during the examinership process because they are not secured creditors. They will sell the restaurant the fruit, the vegetables and the meat but they know it is in examinership and that if there is any money to be divvied out, they are at the bottom of the pile, and therefore they will not do it. In this case again the examinership process fails because the company cannot continue to trade.

It is the combination of those five problems, and undoubtedly many more, that mean examinership in Ireland is not working for SMEs and because of that, viable companies are being shut down throughout the country and jobs are being lost that should not be lost.

As I said, in the past three years there were approximately 4,700 insolvencies in the country. It is difficult to estimate how many of them could go through a functioning examinership process but if we are conservative and say that one in five of the companies deemed insolvent go through examinership, then over the past three years nearly 1,000 companies that no longer exist would have been saved.

It is entirely possible that the potential prize is much bigger. There are approximately 15,000 SMEs in Ireland. Sadly, that figure is down by about 2,000 since the start of the crisis, but those 15,000 SMEs still account for 70% of the workforce in this country, according to the Department of Finance and, astoundingly, constitute 99% of all companies operating in the Republic. It is an understatement - we hear it all the time; I hear the Minister say it and I say it - that SMEs are the backbone of this economy, but if 70% of the workforce work in them, and they constitute 99% of the companies in this country, then it is worth repeating that saving these companies and helping the sector is helping the backbone of the economy. However, they urgently need a functioning examinership process.

Just a few weeks ago, in December, the Central Bank reported that up to half of the total amount loaned out to SMEs could be in trouble. Currently, about €50 billion is lent out to SMEs. We could be talking, therefore, about €25 billion in loans to the SME sector that are currently in trouble. At the same time, we know that Irish businesses are finding it hard to raise credit. Some of the banks disagree, and perhaps in some cases they are right, but a recent European Central Bank, ECB, survey shows that Irish SMEs are facing significantly tougher credit conditions than the eurozone average. The ECB is saying it is harder for the SMEs to get credit here than it is for SMEs, on average, to get credit in the eurozone.

What is the likely result of that? The Central Bank says half of the loans could be in trouble. The ECB says it is harder for the Minister's SMEs to re-finance, therefore, the likely result is that many more SMEs that do not need to close down will close down this year, next year and the following year. They are viable SMEs that have had a shock to their profit and loss. That may be partly their own fault or entirely somebody else's fault. That will happen because the examinership process does not work. It is not fit for purpose. That is why I have introduced this Bill. I am fairly sure this is the first Private Members' slot I have had on my own since this Dáil term started nearly three years ago. I have chosen to introduce the examinership Bill in that slot because I believe that if we get this process right, thousands of companies that otherwise would close will continue to trade, and tens of thousands of jobs will continue to exist that otherwise would not.

The Bill radically reduces the cost of examinership. Our best estimate is that it will reduce the average from €70,000 to €20,000. It does this by removing the necessity for all parties to appear in court on multiple occasions, hence lowering the legal fees. There is still full court oversight. Any party can still bring proceedings to court at any stage if they wish, and there is still final court authority. The final examinership agreement must still receive court approval.

The Bill makes it more difficult for vexatious or frivolous court involvement. If a judge deems a creditor to be involving the court for vexatious reasons, legal costs can be awarded against that creditor. That makes it much more difficult for a powerful creditor to bully viable businesses out of the examinership process.

The Bill allows the court to impose lending conditions on secured lenders over five years. That is important. It means that a bank cannot simply activate the on-demand clause and shut down a viable business. However, the bank still does well. It retains its security. It is paid 7% per year interest on that security and after the five years, it can call on the security.

The Bill allows the court to change upward-only rent contracts. In this case the rent is adjusted to market rates plus 7% for five years. We are told that the Government sought opinion on upward-only rent agreements in 2011 and that there might be constitutional issues, therefore, it did not try to legislate for them. The case of examinership, however, is different. Should the company be shut down, the landlord would in future receive market level rent from the next tenant, and will incur the cost of trying to find a tenant and get rid of the existing tenant. Under examinership, they would receive 7% higher than the market rate, and they would not incur any of the costs of securing a new tenant. As such, the landlord has not only not been unfairly prejudiced, the landlord's property rights have not been affected but improved based on what would have happened through a receivership or a liquidation process.

The Bill allows the examiner to give priority to certain essential creditors. To go back to the example of a restaurant, the Bill would allow the examiner, with the approval and authority of the court, to give the same level of protection to the company supplying the food as it gives to the bank. This means that essential but unsecured creditors would continue to trade with the company, meaning the company could continue to trade.

I have discussed this Bill with the Small Firms Association and its members support it. They mentioned that they have been trying for years to get the examinership process changed and that the changes in this Bill would work very well.

I have discussed the Bill with the Dublin Chamber of Commerce, and it stated:

The ultimate aim of examinership is to allow the business to survive and recover. It is important that politicians ensure that legal hurdles to enter the examinership process are in proportion to the size of a business. Making sure the process moves as fast as possible will reduce costs for SMEs, leading to more businesses escaping a situation in which all parties would otherwise lose out.

This Bill achieves all of those goals.

The SME sector in Ireland deserves and needs the Oireachtas to support it, and this Bill does that.

It could save thousands of businesses and tens of thousands of jobs without investing 1 cent of public money. If the Government accepts the Bill on Second Stage, we will begin to see the benefits of the legislation very quickly.

I will conclude with a political point. Government Members regularly criticise the Opposition, not unreasonably, for not proposing solutions to the crisis. This Bill offers a good solution which will save businesses and jobs. The question for the Government is whether it is prepared to accept solutions when they are proposed by Opposition Members. I commend the Bill to the House.

Deputy Finian McGrath

I welcome the opportunity to speak on this radical new Bill and commend Deputy Donnelly on his magnificent work and attention to detail in preparing it. The Bill will help real people, real small businesses and, above all, real jobs. It will reduce the cost and time involved in the examinership process and make it more accessible to businesses while retaining all of its current advantages.

At all times, we must maintain our focus on jobs and youth unemployment, which is currently running at 28%. This is an issue that is often ignored in this House. It is unacceptable that so many talented young people are unemployed. This pool of talent should not be ignored because they are the future for our country. It is time we got them back to work and paying their taxes. Many of them have new ideas, like Deputy Donnelly's Bill, and we need to encourage and support them. They are also an important part of the SME sector. Our future lies with firms that employ fewer than 50 people. This Bill could make a major contribution to the examinership process and job creation. I regularly engage with people working in the SME sector in parts of my constituency such as Artane, Donnycarney, Howth, Sutton, Clontarf, Baldoyle, Marino, Drumcondra and Coolock. I listen to them when they come to me with their problems. On behalf of these people I urge the Government to accept this Bill and support small firms on the northside of Dublin. We will not be able to solve the the jobs crisis or support SMEs unless we deal with the debt issue. This is why I agree with Deputy Mathews that we need strong voices in Europe who will say that we do not accept somebody's else debts. If we do that, we will no longer be choking economic development and the SME sector.

Last week a young business woman discussed the problems facing her small company, which specialised in dog grooming, with me in my clinic in Donnycarney. She is facing an increase of 177% on her commercial rates. How in God's name can a small business get off the ground with rates of that level? Professional dog groomers are calling for VAT fairness. The unfairness of the VAT code as it is currently applied is a disincentive to competition in the dog grooming profession. They want to encourage the cottage industry of dog groomers to leave the grey economy for the legitimate sector, thus increasing tax yield. These young people have ideas and they want to come into the formal sector but they are being undercut by those who work in the black economy. It might cost €50 to have a dog groomed by a tax compliant business but others can do it for €25 because they are not paying rates or taxes.

I noted earlier that young people and SMEs are the future of our country. Mark Little is a former RTE journalist who set up a company that contributed €8 million to the Exchequer when it was sold recently. The company retained its 35 employees following the sale. People who want to expand their companies are saying that the Government needs to wake up, smell the coffee and help them. This Bill is an example of Independent Deputies putting forward positive ideas aimed at resolving the problems that face this State. The cynics who claim that Independent Members do not make a difference are wrong. This Friday I will be putting the Down's Syndrome (Equality of Access) Bill 2013 before the House. Independent Members are not simply lashing out at everybody; we are coming up with constructive solutions.

The Bill provides for a system of examinership in respect of small firms with fewer than 50 employers and a turnover of less than €10 million. Our economic recovery is entirely dependent on employment, which in turn depends on the success of our small firms. I remind the House that 99% of the companies in this State are small businesses. These businesses provide 70% of employment in the country. I acknowledge that we need to attract companies from abroad but we cannot take our eye off the ball in respect of the SME sector. The biggest issue facing small businesses is debt. The examinership process was designed to deal with debt but it has become inaccessible to all but the biggest businesses. When smaller entities avail of the process, the expense involved makes it less likely that they will survive. SMEs are the backbone of the economy. The investments that a company makes in premises, fittings and stock are immediately lost in the event of insolvency. The smallest insolvency means that the promoters are financially wiped out and the employees lose their jobs. The goodwill for the business is lost at a stroke. There is, therefore, a significant financial cost when an entrepreneur tries to revive the business. The absence of credit means that the money required to create jobs is not available. These are issues for the real economy.

The Bill provides that where two independent financial experts assess a company as having a prospect of survival, it can enter a rescue process designed to play to the financial expertise of those charged with its rescue. The courts will oversee every step in this process. The resulting savings will make the process affordable to many companies, including many that would go into liquidation under the current system.

The company can have certainty regarding its costs into the future. The framework for investment is such that costs of the process are not disproportionate to the investment, which is currently the case. These are the important points on which to focus.

On the proposed changes, the examinership model makes three main changes to the system currently available under the Companies (Amendment) Act 1990. These are: the removal of adversarial court involvement - say, where creditors or contributories require court oversight or where a creditor appeals to the Circuit Court on the ground of unfair prejudice; the ability of the examiner to impose lending conditions on secured lenders over a period of five years based on a minimum altered lending amount to the value of the underlying security plus 7%; and the ability of the examiner to impose changes to leases over a period of five years based on a minimum term of the market plus 7%.

Currently, examinership is an expensive process, running, even in simple cases, to many tens of thousands of euro. Most of the expense is not required as it relates to legal fees and fees incurred by the examiner in preparing for court. The Bill seeks to greatly reduce the costs - we estimate by more than half. This money is then available to be invested in the business.

I welcome the Bill and I commend Deputy Donnelly on its introduction. This is offering a solution. It is helping us in a time of crisis. I urge the Minister, Deputy Bruton, to look at the detail of the legislation.

Deputy Catherine Murphy

I also welcome this Bill and commend Deputy Donnelly on his work. Obviously, a lot of work has gone into it. The Bill is timely. In fact, I suspect that Deputy Donnelly would say that if it had been published 12 months ago, it would have been even more timely. The focus of it is absolutely right.

Rightly, there is a lot of focus on job creation. I would acknowledge that some of the new jobs have become obvious in my constituency and the sense of good feeling that is created when there is hope for people. Job retention is just as important. When one considers the amount of money that goes in, even from the State side in unemployment payments, retraining the unemployed and paying redundancies, and the knock-on effects when a small business fails where other business may well end up being lost as well, not to mention that often suppliers are not paid, one can see that job retention needs to be looked at in a holistic way. It involves much more than the small business. There is a knock-on effect.

The present law governing examinerships was written some years ago and reforms have not been easily forthcoming. I note that the consolidated Companies Bill 2012 is wending its way through the Dáil and is on Committee Stage, but that Bill does not represent the kind of radical reform needed in this area. The Companies Bill 2012 is almost like a copy of the Golden Pages. It is a huge piece of legislation. It was started some years ago - up to ten years ago in the case of some aspects. Some of its provisions are of the era prior to the current one, and much has changed since then. We can all expect many amendments to that Bill. Examinership was quite rare prior to the crash. Today, because of the wider economic problems, it is much more likely.

This Bill focuses on small to medium-sized companies. These are quite large, when one considers that they employ up to 50 people. The Bill is targeted at such companies that find themselves in difficulty getting credit - for instance, because of lower demand and costs - and that perhaps took on developments during the boom and are trying to service them.

The Bill seeks to tackle the power imbalance that currently exists in Irish law in the area of examinership. That is critical. The banks retain significant power in the process. That is something that Deputy Donnelly has identified as needing better regulation and I hope that will be taken on board. The Bill seeks to put in place a clear process outside the courts system, but not without recourse to the courts, which avoids hefty legal costs and endless litigation and represents a good chance for creditors to collect on their debts ultimately.

At present, the strong have the power and they are the ones who are surviving. It is the small indigenous companies that are the ones that are going to be in most difficulty. It is interesting that we look at solutions such as mediation in family law. Whereas that was unheard of 15 years ago, it is now seen as a valuable process. This demonstrates that one can operate differently.

It is not only a matter of the constant visits to the courts and the cost. There is a human cost of having this hanging over people, which means they cannot invest their energies, time and expertise in what they should be focusing on - namely, the business. Many in the small business sector who have got into difficulty will tell of the weeks and months they have not slept with worry. There is a human cost that we must factor into this.

The examinership process would provide a bit of breathing space for small to medium-sized firms and would help to ensure the survival of more businesses that are in trouble. There are safeguards in the legislation, and rightly so. Banks, as I said, have been extraordinarily powerful in determining whether businesses live or die, calling in loans and collateral far too early. That may net some return for the banks, many of which are foreign banks which were happy to cut their losses and go, but the wider effect on the economy of firm closures must be taken into consideration. We all can accept that this is in the banks' interest too, and in our interest, because we need to have banks that are functioning.

This Bill tackles the problem of requiring banks to keep lending where there is a reasonable chance of a firm returning to profitability. That has been outlined well by Deputy Donnelly in a practical way. Similarly, the Bill tackles the issue of landlords moving to evict companies from leased premises by allowing for a set formula to be applied where a landlord would receive market rent plus 7% provided the lease has not been terminated. Obviously, there is a focus here on upward-only rent reviews. One can see where the big companies have been able to do that, where they have gone into examinership and been able to renegotiate and one sees the jobs coming back. We need to see that model expanded to the small to medium-sized sector.

The measures contained in the Bill are forward-thinking. I strongly urge the Government not to oppose it. Even if it is a question of taking aspects of it and including them in the Bill that is under way, that would be a positive step.

We all know of small businesses that were encouraged to develop when there was plenty of money. They were almost made to feel stupid if they did not expand by building an extension onto the side of their premises or whatever. It is the same banks that are putting the same businesses under pressure to deliver within unrealistic timeframes. As I said, there is a knock-on effect if workers are made redundant in that they must be retrained, whereas if small firms survive, there is the possibility of ramping up when the economy improves and their position improves.

We need to take a holistic approach. If one travels the country, one will notice in every village all the "To let" and "For sale" signs, the loss of passive security on the main streets, the loss of commercial rates and the dereliction. It is not a pretty sight.

Many of these small or medium-sized businesses will not survive. However, if more of them survive there will be a return to local authorities by way of commercial rates. There is also a range of other areas in which advantages will accrue.

I welcome the Bill and hope the Minister will find a way of accepting its main provisions. I also hope that the Government will decide not to oppose it.

Acting Chairman (Deputy Peter Mathews)

I call on the Minister, Deputy Bruton, to reply. I understand he is sharing time.

Minister for Jobs, Enterprise and Innovation (Deputy Richard Bruton)

I wish to share time with Deputies Damien English, Áine Collins, Tom Barry and Paul Connaughton.

Acting Chairman (Deputy Peter Mathews)

Is that agreed? Agreed. I understand the Minister is taking ten minutes and the other speakers will have five minutes each.

Deputy Richard Bruton

I would like to thank Deputy Donnelly and those who have worked with him on this Bill for bringing it forward. I can see that a lot of work has gone into it. I have had an opportunity to meet Deputy Donnelly and there is absolutely no doubt about the bona fides of what he is trying to do. This debate is timely because we continue to have a serious challenge in this area.

I took up this issue myself as a serious challenge and referred the matter to the Company Law Review Group. That group is composed not only of legal and technical experts but also representative bodies including ICTU and ISME. The group studied this issue and reverted to me with recommendations as to what could be done. The first thing the group proposed was that examinership should continue to be the vehicle we would use in seeking to deal with companies in these difficulties, as Deputy Donnelly accepts.

The group also recommended that we should move from the High Court which added unnecessary cost to the Circuit Court, and I have done that. I acknowledge the support of the House in doing so. It was done with a view to taking out 30% of the legal costs or reducing 70% of the legal costs, which would be 30% of the costs in the High Court. Like Deputy Donnelly, I believe that by making that change we can move from a situation whereby only 60 to 80 companies avail of examinership to one where it is more prevalent.

The other issue the group recommended was to introduce a simplified administrative initiation of examinership for small private companies. The group talked about the need to identify an appropriate agency that would receive the preliminary evaluation. It would provide an alternative that takes the court hearing out of the first route of examinership. However, the group made it clear that the simplified procedure should only extend to the appointment of an examiner and that any scheme or proposal formulated by the examiner must be approved by the Circuit Court. The group believed that oversight by the court remained an important element.

I am now setting up a working group to examine that proposal further and see if that route is viable. I will certainly look at some of the items raised by Deputy Donnelly in the course of that working group. Unfortunately, however, I am not in a position to support this Bill on Second Stage. I think there are too many difficulties that would render it unworkable and open to challenge, so I simply cannot support it.

This is a complex area and the Deputy has acknowledged that. In any situation of examinership one is seeking to balance the interests of some creditors against others. We all want to see a company that is basically viable get the opportunity to recover. Equally, one must ensure that there is balance in their treatment, and that those who are losing out in that situation will get a fair hearing for their position and will be protected in a fair and equitable process. They, too, can be small businesses who happen to be trading in good faith with that company. They may find that their debts become unsecured or subject to significant losses. There is therefore always a balance to be struck where one is looking at a company that has got into difficulties and is seeking its creditors, and other people it is trading with, to be paid less. One must ensure that it is done fairly and there is clearly a public interest in seeing that businesses are viable and jobs can be saved.

The trouble with Deputy Donnelly's Bill is that he has made so many changes in this area, and has removed the court from so much of the oversight, that it would create significant risks that the measure would be unconstitutional. The last thing we need to do is introduce a piece of legislation that would build up hope or expectation and then fall at the very first hurdle.

In a number of areas the Deputy has departed from the existing process and that creates serious concerns. For starters, the examiner is not appointed by a court - it is appointed by the company without any test of independence. The examiner then goes on to issue the protection order itself and the court oversight is only in respect of being worthy within the various thresholds. The court has a role in receiving the protection order but simply to ensure that it conforms.

A creditor would then have to appeal against the protective certificate being issued. However, Deputy Donnelly's Bill has created some pretty high hurdles concerning what that creditor would have to meet. It includes being able to show the court that matters of a material nature are not disclosed in the independent accountant's report, or that the company has been acting to defraud its creditors. The hurdle of proof for someone who is at risk of losing their position is very high, including demands of an evidential nature for a person challenging it at that early stage.

The examiner is also given the role to take over the power of directors in the Bill, again without court oversight of that process. The examiner need only form an opinion that they are obstructing him or her to have the right to take over directors' powers.

The scheme of arrangement involves the final deal. Yet again, the onus is very heavily put onto the creditor who may also be in a weak position struggling with a business. A creditor must not only vote against the scheme of arrangement but must also go to court to prove that he or she has been unfairly prejudiced. The court is already given a direction in this Bill that it must have particular regard to the opinion of the examiner over and above the opinion of an individual creditor that might be challenging. When it comes to the issue of costs, the challenging creditor must bear his or her own costs. This significantly changes the balance in this area. We have a Constitution that protects the property rights of people whatever position they are in. The argument is strongly presented that this is going to such a degree of rebalancing those rights that it is going extremely far.

While taking the court out and placing many hurdles before the creditor, the Bill also gives a lot of new powers to the examiner to repudiate leases and write down secured debts. Against a background of the creditor's position being significantly weakened, this could be seen as unjustified and disproportionate interference in the property rights of those involved.

With this Bill we are running the risk of serious constitutional problems concerning the protection of property rights. While I understand the Deputy's motivation, that is not a risk I can take. The last thing we need is to create what seems to be a sound Bill, but which is so flawed that we would have serious difficulties with it.

I intend to continue to work to produce a more effective examinership system. I intend to push on with this work to see if we can develop, as the Company Law Review Group has indicated, a process that will make it cheaper for an examinership to be undertaken. This involves seeking to remove the hearings from the first part of the examinership process. Having court oversight and fairer access for a creditor than is provided for in the Bill are inherent in the way the examinership process must work. While clearly the intentions of Deputy Stephen Donnelly are good, he has gone too far in the Bill and it is not one I can support.

Deputy Damien English

I am grateful for the opportunity to speak about the Bill proposed by Deputy Stephen Donnelly, the Companies (Amendment) Bill 2014. While I may not agree with all its contents, I agree with the intent behind it, to protect viable companies, jobs and State revenue that could be lost if businesses were to fail. The Deputy was helped by Mr. Barry Lyons, solicitor, and Mr. Ross Maguire, senior counsel, who are totally genuine. Having read the Bill and listened to the Deputy's speech, this is an attempt to bring about a change that we would all like to see in making the process simpler, easier to access and less costly. The Minister has championed this change in the past two years. It was also highlighted in the programme for Government. We all want to do something about it and tabling a Bill helps the debate and will move it forward. I do not agree with some parts of the Bill and the Minister has outlined many more instances where the Government does not agree with it.

The same protections would not be available under the Bill as under the current system. While I accept the proposed changes to the examinership process would significantly reduce the cost and the time involved in the process and make it more accessible to business, I do not agree that they retain all of its current advantages. It would retain them for the company which would be protected by a receiver, a liquidator, a sheriff in seizing goods, in the enforcement of personal guarantees and other court proceedings. It would also have the opportunity, in this examinership model, to retain key staff, management and goodwill and use the existing customer base and contracts and seek to increase them, as well as keeping the assets. All of the advantages would be with the company that chose to enter into the process.

I fear the Bill would not retain the current advantages for the creditors of a business. In practice, creditors accept the examinership process as opposed to receivership or liquidation because they have some hope of getting something back. I would, therefore, like to see the examinership system used more. Deputy Stephen Donnelly's proposal would lessen the rights of creditors, which would be slightly unfair. In the past couple of years people talking about creditors are thinking of banks, the debt they are owed, the write-off received and wondering why they cannot get a write-off. Many creditors are suppliers of goods, other small businesses and sole traders. They are also ones we want to protect. It is very important, therefore, that a new model protect all rights. While it could make it easier for the company in trouble that could be viable with the right procedures, we cannot lessen the rights of creditors. These are other small businesses and if we lessen their rights, we will not achieve enough in this process. Examinership is a model that is generally beneficial to creditors and that will continue to be the case.

A problem arises if a creditor does not agree to the survival plan put forward by an examiner. The Bill would force creditors to initiate a court case if they objected to the plan. This would make it more difficult for creditors that have supplied goods and services to defend their interests. This would place an unfair onus on the creditor which could be a small business or a sole trader to take on the risk and the cost of a court challenge. The onus should remain on the company, through the examiner, to establish the case for the plan and have it independently judged and assessed. That independence is provided for in the court process. We could certainly reduce costs by taking this process out of the courts system, but we must retain some independence.

I welcome the Minister's intention and desire, mentioned tonight and on previous occasions, to establish a working group to examine the feasibility of allowing small private companies to initiate an application to be placed in examinership through an administrative procedure. That model could work best and may involve a combination of what is proposed in respect of the administrative panel. However, there must be independence in this matter. We cannot have creditors being forced into court to protect their interests. That would be going too far and unfair. That is my reading of the Bill and if I am wrong, Deputy Stephen Donnelly can correct me. It refers to where creditors would have to go to court to have the plan judged if they did not accept it. That is not fair.

Deputy Stephen S. Donnelly

They must go to court anyway.

Deputy Damien English

I accept that, but they do not have to cover the costs involved and in this instance they would take on all of the risk.

Deputy Stephen S. Donnelly

They do.

Deputy Damien English

The creditors go to court together. Under this model, at a later stage when the plan had been produced, if they were unhappy, they would have go to court. That is not the way to go about it, although I accept what the Deputy is trying to do.

We must find a procedure that has the correct balance between the cost of examinership and the protection offered to companies. We want to see progress made, but we must protect as many businesses as possible. We all know of many companies that would be viable if they did not have debts and if they were not being dragged down by property debt. We must find new solutions. I, therefore, urge the Minister to move forward with his suggestions as quickly as possible. We want change, although not as far as Deputy Stephen Donnelly proposes.

Deputy Áine Collins

I welcome the opportunity to debate ways of helping viable small business to survive through difficult times. This means helping all small businesses. If businesses can enter examinership too easily and without proper supervision and fair procedures being applied, their creditors may end up suffering. These creditors, for the large part, could also be small businesses and end up being forced to close. The current examinership process has been used effectively by some larger firms to deal effectively with issues such as upward only rent reviews. Viable businesses have been kept in operation and protected jobs; therefore, the examinership process can work well. However, the process of going through the High Court is far too expensive for small companies or sole traders. We, therefore, need to find a solution to provide a similar process but one in which smaller companies could avoid the costs associated with going to the High Court. In trying to achieve this, it is equally important to protect the rights and welfare of creditors. The balance has to be right and, as the Minister mentioned, there are constitutional issues to be taken into account.

We have to find a solution. Deputy Stephen Donnelly is right that we need to develop an examinership process that is workable for viable small businesses and protect associated jobs. The Minister agrees with the general principles of the Bill and has taken and will continue to take steps to achieve the same results in a more balanced way. The programme for Government has proposed introducing new, legally binding voluntary administration procedures. However, in reporting to the Minister, the company law review group, CLRG advised that it would not be viable to introduce a fully non-judicial debt settlement scheme, as proposed in the Bill, as such a scheme would require the consent of all creditors. From past experience of trying to do this before a company entered liquidation, it is very difficult and highly unlikely. Nobody wins when a company ends up in liquidation. The Minister sees merit in the proposal, but, in the light of the advice received, has decided that further work needs to be done. He proposes to set up a working group to examine the feasibility of allowing small private companies to be placed in examinership with the minimum of court oversight. This debate and discussion should help to guide the working group to arrive at an appropriate recommendation that would have the correct balance between the rights of the person seeking examinership and those of the creditors. In this context, it is important to note that the Minister has been progressing a commitment whereby small businesses can apply for examinership to the Circuit Court, which we all agree would be a far less expensive option. Enabling legislation has already been passed - the Companies (Miscellaneous Provisions) Bill - which will come into force once a commencement order is issued. I look forward to seeing a strong working group being established and hope a much less costly and burdensome examinership process can be found for small businesses.

Much work has been done on the Bill by Deputy Stephen Donnelly and also in the subsequent analysis of it by the Company Law Review Group and the Department.

Therefore I hope the next steps to find a solution will be taken as quickly as possible, as time is of the essence for many viable companies all over the country. We must also set this in place if we are to develop entrepreneurship and encourage people to set up businesses, as if things do not work out, there must be a process in place which is not hugely burdensome.

Deputy Tom Barry

I welcome the opportunity to speak to this Bill, as it is good to see concern for small and medium enterprises, SMEs, and jobs. I am one of the 15,000 people who runs an SME in the country, as mentioned by Deputy Donnelly. After 20 years running the enterprise, I have come across most of the ups and downs at this stage. In the limited time available, I will discuss some of my reservations about the Bill, although I am glad this important matter is being discussed. There are issues nonetheless.

The Bill would give way too much power to the examiner and it would make me, as a supplier of goods, nervous to see an examiner with that much power. It would be there to be mistreated. I have not seen mentioned any qualifications for the examiner. I spoke with the Director of Corporate Enforcement a while back and the qualifications of people doing this job must be pinned down a little more firmly. We cannot sidestep the oversight of the court, and although I am sure that is not what the Deputy is aiming to do, we must say that quite clearly, as required. I cannot stand the idea of costs going to the creditor. In many cases the creditor may be just surviving, and this is just about adding another cost. We have all spoken about getting rid of the costs to businesses today but this would add such a cost. In business, people are only as good as their next year, so I do not like that extra cost.

I do not see the need to give executive functions to the examiner, and to be blunt, this seems to be a back door Bill for challenging upward-only rents. Why do upward-only rents come about? Both sides in such agreements would have had legal advice, with one side looking to get the best possible deal and the other seeking the best premises. These parties would have signed up to crazy rents that could only go in one direction; in some instances there was an element of greed. I am involved in much renting of land and if I rented half of County Cork at a ridiculous rate, although I would have the land I would not be able to pay for it. That is not the way business works. There is no onus to save people who make terrible business decisions, and we must realise that because business is competitive, those who are successful are usually the people who make good decisions.

With regard to the proposed section 36J(2), I have to ask if the same would apply if the roles were reversed. I am not sure it would. This proposed section would bring about a negative effect if creditors saw how they would be less secure in their supply of goods.

The Deputy mentioned five main points. He argued that examinership is too expensive, which is absolutely true. I am not sure what Deputy Donnelly meant by "abuse by creditors", as most creditors just want to be paid. They do not want anything more than that. The Deputy indicated that refinancing costs are too high, which is true. I am thankful that many of us in business have very good rates if we did well in the good times and still held those rates. That is not only applicable to examinership and would apply if loans were to be rescheduled. Currently, by the time the loans are rescheduled, the interest rates might make them higher than if current lower rates are applied. The Deputy also mentioned upward-only rents being applied by landlords, and I have gone through that. A landlord may get a similar deal with a business that will honour its commitments so if there is a problem, the business owner must sit down with that landlord. The Deputy's last point was that creditors will not trade without guarantees, and who would want to do business and feel they might not be paid?

There is an element of burning the people supplying goods in this. One may argue that a landlord has unearned income but the person supplying goods deserves to be paid. There is nothing worse than supplying goods or services to somebody and not being paid. Any business will go through a creditors' book and aim to pay its bills. I accept this is a serious issue but I have some reservations that must be addressed. We should discuss the matter further.

Deputy Paul J. Connaughton

I thank the Ceann Comhairle for the opportunity to speak to the Bill, which aims to secure the future of Ireland's small businesses via the examiner process. Although there are many laudable aspects in this proposed legislation, there are others that may well be impractical, given the short interval in which an examiner must work. That is why the Government is unable to support this legislation.

Deputy Donnelly has correctly highlighted the need to reduce the cost of entering examinership and is attempting to remove some of the current barriers to business that are causing otherwise viable companies to falter in prevailing economic conditions. Proof that the Government recognises the need to reduce examinership costs is contained in the Companies (Miscellaneous Provisions) Bill 2013, which would permit small businesses to apply for examinership in the Circuit Court, where costs are significantly lower. They may be up to a third lower. Although this is welcome, we should consider a structure that would suit even smaller businesses. For example, the legislation defines small companies as those with fewer than 50 employees and a turnover not exceeding €8.8 million. We should also consider providing a smaller framework for companies with fewer than ten employees and a turnover of less than €1 million.

As employment levels rise in tandem with economic prospects on the domestic front, these small or micro-companies need time to recuperate and build resources and capacity before re-engaging with debts. High rents are one reason small companies, as defined in the legislation, are seeking the protection of examinership, but the micro-companies of which I speak are also facing this problem. They are often dissuaded from entering examinership because of prohibitive, albeit reduced, court costs.

Problems with the Bill include the removal of obligatory court oversight and the prospect of allowing the examiner to assume the powers of directors if it is believed that directors are trying to stymie the examiner process. This would result in an examiner acting as judge and jury and would leave no avenue for appeal open to directors. Requirements that the examiner would report to the Director of Corporate Enforcement are unworkable and would effectively change the nature of examinership while broadening its remit significantly beyond what is currently intended.

Valued issues are raised in the Bill, including the need for a more effective rescue system for ailing businesses. However, small businesses are interdependent and allowing firms easier access to writing down debt would in turn damage many viable firms both now and for years to come. Similarly, the provision in the Bill that creditors should bear their costs is contrary to common law and would cause unforeseen and unwanted costs on many small companies whose debtors enter the examinership process.

This Government is committed to supporting job creation and helping companies of all sizes to survive the downturn of recent years and avail of opportunities as the economic climate - locally, nationally and globally - improves. Much of the focus of this Government over the past three years has been about reducing costs for businesses, with an emphasis on building an economy based on enterprise, innovation and exports. It is only through a focused enterprise culture that Ireland can prompt the innovation so necessary for companies of all sizes in today's rapidly changing economic climate.

The focus on jobs has been intense and efforts by the Minister, Deputy Bruton, and his Department have borne significant fruit, improving the country's competitiveness and placing all the necessary back-up infrastructure at the disposal of Ireland's export countries. Ireland has gained several places in ratings of world competitiveness in the past two years, which is proof that real steps are being taken to cut the costs of doing business in Ireland, and this is increasingly being recognised on a global level. A number of innovative measures have been put in place to allow small and medium companies greater access to finance, including the credit guarantee scheme and the micro-enterprise loan fund. To date, over €10 million has been approved through the credit guarantee scheme alone, which is a very significant injection of funds for companies which in turn has helped create and maintain over 650 jobs.

This Bill highlights areas to be addressed but the Government has set out the reasons it cannot be supported at this time.

Deputy Dara Calleary

I welcome the chance to discuss Deputy Donnelly's Bill, which we will support if only to allow it proceed to Committee Stage, where many of the concerns expressed by previous speakers could be discussed, rather than at a working group immediately outside the House.

Bringing it to Committee Stage points to a problem. We have a very good jobs committee, chaired by Deputy English, and party jerseys are left outside the door. For whatever reason, however, the Technical Group does not participate and we do not have the benefit of this type of discussion at committee meetings. If we did, perhaps we would be able to make progress on some of these issues. This could be reviewed as a consequence of this debate in the interest of the Bill.

It is to the Minister's credit that he introduced what we know as the mini-companies Bill immediately prior to Christmas. This opens up the examinership process but it is still ludicrously expensive and time-consuming. Considering the pressure placed on companies, many will shy away from the process.

A number of the costs to which Deputy Donnelly referred are legal costs. We are three years into the life of the Government. Within a number of months it introduced the Legal Services Regulation Bill, but it is still parked. It is discussed by the committee every so often in terms of the transformative effect on legal costs. Invariably, legal fees are associated with examinership and company restructuring. However, until the Government takes firm action and stops kicking the can down the road regarding the legal services legislation, and while there is some sort of tug-of-war between the two Government parties, legal costs will still be too high for small companies, including the types of company that this legislation affects. This is unfortunate. While I acknowledge it is outside the jurisdiction of the Minister for Jobs, Enterprise and Innovation, action needs to be taken.

The examinership process is particularly intensive. The new Bill opens up all sorts of possibilities for it. However, there has to be a discussion in this House and broader society on helping SMEs to move away from legacy debt. They should be able grow their businesses on the tide of a recovering economy and deal with the debt when they have an ability to do so. Too many jobs and successful businesses are being lost on the back of legacy debt. Viable businesses that are providing a service and employment are being lost. Their day-to-day operations may be healthy and viable, yet they have little alternative but to proceed to liquidation or receivership. It is too early to determine the impact of the Companies Bill 2013. Immediately prior to Christmas, some very high-profile large companies did a deal with their banks and had considerable debts written down. However, this is not the preserve of many SMEs. One will not read about many SMEs who have faced this situation in the business pages of any of our national newspapers. They close and leave debt and unemployment behind them. We need to have a realistic discussion and arrive at a solution quickly in this regard.

The key issue for any business in terms of expansion and getting out of financial difficulty is access to credit and finance for working capital to allow it to grow, take advantage of opportunities that may arise and create employment. The Minister and I have discussed already my inability, as an Opposition spokesperson, to call the effectiveness or otherwise of his plans. For instance, when we put a question to the Minister for Finance, Deputy Noonan, on the €2.5 billion that the two pillar banks have loaned to SMEs, he says they have loaned on target. I do not doubt him, but when I ask whether this involves new lending or restructuring of existing lending, and when I ask about the sectors of the economy that are benefiting, I do not get a breakdown. I understand much of the money has been loaned to those in the agriculture and food sectors. This is fine as it is creating employment. However, we cannot get a breakdown because of commercial sensitivity. Microfinance Ireland and the credit guarantee scheme are way below target. There is now a lacuna in Microfinance Ireland as it recruits a new chief executive. I do not know what happened in this regard because the chief executive that was in place and the current chairman are two very impressive people. When they appeared before the committee, they were very focused. I fear we will lose that focus. It is still very hard to call the effectiveness or otherwise of lending to SMEs. We are supposed to believe the Department of Finance's contention that we have met the targets, that €2.5 billion has been lent and that we will do more. We are supposed to believe the CRO without being given the empirical evidence to study. I ask the Minister to provide the relevant information to allow us to have a proper discussion on SME financing.

Since the examinership process began in 1990, it has served a purpose. Until now, however, small companies have been absolutely excluded because of the cost. From January 2012 to November 2012, there were 26 examinerships. There were 19 in 2013, representing a decrease of 27%. The inability to pay for examinership was the difference between surviving and failing for many companies.

There has been much discussion on upward-only rent reviews this evening. The difficulty for Government Deputies in advocating discussion on this or criticising or wringing their hands over upward-only rent reviews is that they made it an issue. Both of the parties in government made promises before the last general election that they would resolve the problem in spite of their being in possession of the legal opinion of the then Attorney General. The Government - the Labour Party, in particular - then maintained there was eminent legal advice to the effect that the problem could be solved. It said it would address the matter in the programme for Government and votes were won as a consequence. The problem was not addressed, however, because it cannot be addressed constitutionally. This was known to the Government. All the wringing of hands we will witness tonight and tomorrow on the other side of the House over upward-only rent reviews should be put in that context. It will be very difficult to get around it except through some sort of examinership process. Until now, this has been the preserve of the large chain companies as they have been able to renegotiate rents and use their clout to maintain rents. This facility is not open to the small operator. A property solution for SMEs is essential to allow them to recover.

Business costs in general are not decreasing as they should. Energy costs are still higher than they should be. I acknowledge that this is an island country, which results in extra costs, but energy costs for businesses are not moving in the way they should. Labour costs have decreased considerably but they are beginning to creep up again. We are beginning to see skills shortages in the economy and we need to address that. The notion that we can suddenly start lobbing in claims for huge pay increases because some green shoots are beginning to appear is absolutely crazy in the context of the current business climate. It is a very fragile recovery and the notion of making pay increase claims as soon as there is some sort of recovery is unfair on businesses. Businesses that can afford to pay should do so. The majority of businesses cannot do so as they are struggling to get by in this the recovery. One is completely excluded from dealing with labour costs in the examinership process, apart from making people redundant.

What Deputy Donnelly has done in terms of putting this matter on the agenda is such that we must, in the context of the Companies Bill, Report Stage of which will be considered next week, apply a test or standard to determine whether it will help companies to maintain and create employment. Second, we must question the cost test involved in terms of the services a company needs. Everybody accepts that legal costs are too high. Urgency is needed from the Department. Accountancy costs and costs associated with examinership are generally too high. We tabled a number of amendments to the companies legislation of 2013 which would require those seeking to serve companies going into examinership to be up-front about their costs and publish them. They were turned down. I ask the Minister to pursue this with the agencies in his Department. This Bill or the companies legislation of 2013 should have some sort of mechanism whereby people can investigate prices in advance. There are some companies moving into this market for the sake of making a quick buck and they are using the stress small companies are under to increase legal, accountancy and consultancy fees in the context of the new markers available to them. There needs to be considerable transparency regarding the process and its cost.

While I am concerned about elements of Deputy Donnelly's Bill, such as the lack of any kind of court protection or supervision, and the associated weakness, it could be addressed during a proper Committee Stage debate rather than parking it with a working group in the hope that we will not return to it. We will return to it because the recovery for small and medium-sized companies will not be real until the €50 billion in outstanding loans to SMEs are dealt with. Half of these loans are non-performing. Until we deal with this issue, we cannot begin to expect the SME sector to increase employment. We cannot expect them to expand during the recovery until that elephant in the room is dealt with.

We are beginning to deal with it for mortgages and other arrears, although far too slowly. Until we deal with this issue, how can we expect the sector to create and grow employment? How can we expect those who own businesses, people such as Deputy Barry, to look forward to a time when they might be able to grow out of their debts if we do not give them the mechanisms to do so? The Companies (Miscellaneous Provisions) Bill 2013, the so-called baby Bill, does not do it for a lot of businesses. It is unfortunate that the Minister has decided to oppose this Bill rather than allow it to progress to Committee Stage to see how we could improve it.

Deputy Jonathan O'Brien

I congratulate Deputy Donnelly for publishing this Bill and getting it on the agenda of the House as quickly as he did. It is a topical issue and now is the right time to discuss it further, following the passage of what is known as the baby Bill in December, when, in fairness to the Minister, he recognised that there was an issue around the whole examinership process, particularly for smaller companies, and introduced legislation to try to deal with it. He changed the system by moving the process from the High Court to the Circuit Court, which will make it easier for some companies to access the examinership process, particularly viable companies.

When I listened earlier to Deputy Donnelly introducing the Bill, he spoke in great detail about what he hopes this legislation can and will achieve if enacted. It has been the Minister's policy to try to open up the examinership process to as many companies as possible. We spoke during the Second Stage debate on the Companies (Miscellaneous Provisions) Bill 2013 about what the Minister was trying to achieve and how important it was that the examinership process did not become the preserve of larger companies, some of which have used and abused it to try to deal with issues such as upward-only rent reviews and other legacy issues. I note that Deputy Barry said this Bill was being used, in his opinion, as a back-door way of dealing with upward-only rent reviews, but that would not be the case if the Government had implemented its own programme for Government and introduced legislation to deal with upward-only rents. The Government is saying it cannot be done, on the advice of the Attorney General, but we have not seen that advice. If that is the case, let us see the advice. Let it be put before the Oireachtas Joint Committee on Jobs, Enterprise and Innovation and let us discuss it, because it is our contention that we can introduce legislation to deal with upward-only rents. In fact, Deputy Tóibín, the Sinn Féin spokesperson on jobs, introduced legislation previously to deal with this issue.

Over the next two nights we will hear a lot about the importance of the SME sector, how 99% of enterprises are in this sector, how it provides 70% of all employment, and how it is the lifeblood of the economy. All of that is correct, so any proposals that come before this Chamber to help that sector should be examined and welcomed and should not be dismissed out of hand. Unfortunately, that is what the Government has decided to do with regard to this particular Bill published by Deputy Donnelly. Deputy Donnelly was very honest in saying that his Bill, as published, is not the finished article. He admitted that there was room for improvement and pointed out that he did not have access to the expertise within the Minister's Department. However, some of the people who have worked on the Bill are experts in their own right. Ross Maguire was one of them and I cannot recall-----

Deputy Stephen S. Donnelly

Barry Lyons.

Deputy Jonathan O'Brien

They have both been involved in the examinership process for many years and have dealt with over 50% of the examinerships that have come before the courts. There was a lot of expertise involved in the drafting of Deputy Donnelly's Bill and it would have made more sense if the Government had taken on board what Deputy Donnelly has said and embraced his willingness to work with the Government to try to improve the Bill. It is not a case of trying to improve the Bill to give Deputy Donnelly any kudos; it is about trying to improve a Bill which he and I believe has the potential to make the examinership process easier and cheaper for businesses to access. It is in the interests of the Government and of SMEs in particular to allow this Bill to go to Committee Stage and be debated openly to see if we can further improve on what the Minister introduced in December.

It is a fact of life that businesses get into financial trouble. Viable businesses, because of legacy debt, are being faced with the option of closing because they cannot deal with those debts and with other difficulties from the past. They are viable companies but they just need a little bit of a leg up. They need a little bit of help and we all have a responsibility to try to bring forward legislation to deal with that. Deputy Donnelly's Bill has the potential to do that, which is why it is disappointing that the Government has decided not to allow it to progress to Committee Stage. The challenge, now that the Minister has made the decision not to accept this Bill, is for him to bring forward legislation himself to try to do what Deputy Donnelly has set out to do in this legislation. We cannot just leave it with what was passed in December. We have to continually review and improve policy in this area because if we do not, more and more companies will go to the wall and more and more jobs will be lost.

Debate adjourned.

The Dáil adjourned at 8.55 p.m. until 9.30 a.m. on Wednesday, 5 February 2014.