I thank the Ceann Comhairle for allowing me to raise this very important topic.
This State has expended enormous amounts of money as aids to businesses affected by the pandemic, and rightly so. The purpose of this has been to preserve businesses and jobs affected by the pandemic. More important is ensuring that as many businesses and jobs as possible emerge unscathed when the pandemic is over and the country begins to reopen. It seems that despite the billions of euro in expenditure, there is still one missing ingredient that would make that expenditure infinitely more effective than it otherwise might be.
I came across the amazing statistic recently that the number of insolvencies in this country between 2019 and 2020 only rose by 1%. This blunt fact masks a different position. Many companies, particularly small and medium-sized enterprises and those at the lower end of that sector, are surviving in a zombie-like state, propped up by State supports and debt forbearance. This raises the bleak and frightening prospect of a tsunami of redundancies, particularly among small and medium-sized businesses, once these props are withdrawn. As I have said, the Government has already spent billions of euro on keeping those businesses afloat. For every one of them that goes under, a part of that money will have been lost or wasted, if one were to put it like that.
Under the examinership system, which was put in place in 1990 and amended in the Companies Act 2014, companies in financial difficulty can avoid going into liquidation by adopting a programme of restructuring accepted by creditors and agreed by the court. Two of every three examinerships succeed, thereby enabling thousands of jobs and livelihoods to be saved. However, only a very small number of SMEs have been able to use the examinership process, simply because the costs are prohibitive due to the fact that the matter must be agreed and subsequently supervised before being signed off by the High Court.
There was an amendment to the legislation to enable certain types of companies to use the Circuit Court but, unfortunately, that has not given rise to an uptake in the number of SMEs and small companies applying for examinership. In cases where the matter was dealt with by the Circuit Court outside Dublin, the costs proved higher than they would have been if the High Court had been the relevant forum.
A new, affordable system specifically tailored to the needs of SMEs must be established urgently and be in place before the pandemic supports and debt forbearance come to an end. A model has been proposed by the company law advisory group and it was published on 22 October last. A version of what was recommended by the group must be passed into law urgently. If such a system is in place when debt forbearance and the artificial State props that applied during the pandemic come to an end, thousands of jobs that may otherwise be lost may be saved. Something similar has been done in the UK, although the model is not exactly appropriate to this country.
It is not a question of reinventing the wheel. I am raising this to stress the urgency of the matter and to ask the Minister of State when we can expect to see the legislation to implement the recommendations of the Company Law Review Group, CLRG.