This section refers to the duty of receivers selling property to get the "best price reasonably obtainable". Will the Minister give the House a definition of "best price reasonably obtainable"? I am aware of cases where receivers did not get the best available price. They felt that once they had the secured creditors satisfied their liability was discharged. They were less concerned about the position of unsecured creditors. The definition, "best price reasonably obtainable", might have different meanings for secured and unsecured creditors.
Companies (No. 2) Bill, 1987: Committee Stage (Resumed).
Question again proposed: "That section 136, as amended, stand part of the Bill."
The best price is the best price. I do not think I can do any better than that; it is the best price in the circumstances.
What criteria or guidelines are laid down for the receiver to ensure that he obtains the best price? Will the price obtained under the term "best price" satisfy all concerned that it is the best price obtainable?
I cannot help the Senator any more. The "best price reasonably obtainable" is the best price obtainable.
I might be of some help to the House in this matter. I recall returning from a fair in Dingle some years ago after selling some animals with my uncle and being asked by my grandfather what price we obtained for the animals. When we told him the price, he asked if it was the best price and we replied that we figured it was the best price we could get on the day. We put forward our arguments but his reply was, "I do not care about the arguments; I do not think it was the best price". In my view the best price is that which is unattainable.
The reason I raise the matter is that I am not convinced that the receiver in any company receivership will at all times do his or her best to obtain the best price in the interests of the unsecured creditors. Too often in practice that does not happen. I accept it would be difficult to enshrine that in legislation but I do not think the section lays down the necessary guidelines for receivers to ensure that they get the best possible price for secured and unsecured creditors.
If the Senator has a procedure in mind I will consider it for Report Stage.
I should like to thank the Minister.
At this stage I should like to make a brief comment on the Bill and, in particular, to refer to Part IX. I should like to explain what the Government have in mind without pre-empting the House's consideration of that provision. Senators will be aware that the Government are putting forward in Part IX a new legal mechanism to help rescue companies in difficulty. It deals with a type of intensive care period. What is proposed is that the debts of a company in financial difficulty be frozen for a period to allow it be reconstructed with the help of an examiner so preventing liquidation or receivership. This amounts to a major reform of company legislation. It is the first time it will be on the Statute Book and it is somewhat similar to the American Chapter XI procedure.
In my view we underestimate how radical and reforming is this proposal. It is important that the House should focus on what the Government are trying to do. We are trying to include in company legislation for the first time a period of intensive care for a company that is in difficulty so that it will not have to go into liquidation or receivership. The debts of the company may be frozen for a period of three months, or perhaps four months, during which time nobody can take action against the company. The company will have that breathing space to sort itself out. I predict it will save hundreds of companies; indeed, had such a provision been in operation five years ago it would have saved hundreds of companies. One case that comes to mind is the famous Texaco case. That major multinational company ran into financial difficulties, went into this intensive care period and is now back out of it. If this had been here five or ten years ago I have no doubt it would have saved hundreds of companies that were potentially viable but because some creditors did not have patience the thing was pushed over the brink. I predict, without exaggerating the matter too much, that this will save hundreds of companies in this country in the years ahead. That is why I am pleased to come to the Seanad today to deal with Part IX of the Bill which we will come to very shortly.
We should have waited for that statement on Part IX.
The Minister has probably made his statement prematurely and perhaps should have an opportunity to react.
I was always ahead of my time.
The Minister is very much ahead of his time. I understand that but he has over-simplified the situation in relation to saving hundreds of companies. He certainly will be ahead of his time if he achieves that. I hope the vehicle he is putting in place in relation to Part IX of the Bill will set out to achieve exactly what he has stated but there is widespread concern about certain aspects of the Bill. We have dealt with many of them up to now in relation to the position of a director in a company.
I am concerned about one recent development in the context of the discussion on this Bill, that is, the takeover of Master Meats and the dealing that would have taken place on the Stock Exchange rather quickly over the weekend. A number of people are extremely concerned about the identification of the investors involved in this company, the implications for the agri-food industry and the implications for employment. A Leas-Chathaoirligh, if the Minister has any up to date information, he should have the opportunity in this House, on a relevant issue such as this, to clear the air on a matter or extreme importance and public concern. I would welcome such a statement from the Minister.
I would like to compliment the Minister on his concept of an examiner in the Bill. In my own constituency many jobs would have been saved over the past few years if this concept had been accepted.
I welcome the Minister's introductory statement on Part IX of the Bill in relation to the proposed new facility for bringing companies under court protection. Like a number of others I welcome the provision of this new mechanism and I think it is very important that we get the balance of it right. We will have to be concerned that it is not administratively top heavy. The partial mechanisms that exist already under the existing Companies Acts have not been properly employed because they were regarded as being administratively too cumbersome and too difficult.
We are now introducing what I would agree with the Minister is a radical new proposal. It is very important that it is seen by those involved in seeking to rescue the company as being effective machinery, not as being cumbersome and therefore involving too many time delays and court procedure that is too heavy, and so on. As I look at it at the moment, I am concerned that the procedure is very cumbersome but that is something that we can work at obviously on Committee Stage and on Report Stage. I am concerned on another front. I have been waiting since the start of business today — an hour ago — for the debate on the Companies Bill because I am now about to go to a meeting of the sub-committee of the Joint Committee on the Secondary Legislation of the European Communities to present a report but I hope to be back in time to resume the discussion on this important section.
The matter in question is not something that really comes up today. Now that the Senator has asked about it let me just say briefly that, as in the case of the mergers and takeovers legislation, the onus is on the company to notify the Minister if it falls within the threshold specified in the Act relating to assets, liabilities, turnovers and employers, etc. The Minister has three months to consider the position. He can refer it to the Fair Trade Commission for a report in relation to the various Schedules to the Act including, for example, the effects on competition but also employment and the common good. The Minister can refer it to the Fair Trade Commission. Following receipt of the commission's report the Minister can decide to prohibit or to permit, subject to conditions, the actual proposed merger. I should stress that, as far as I am aware, no such notification has come to the Minister for Industry and Commerce. Until such time as such notification comes, we cannot comment on it further. As of now I am not aware that the Minister has received such notification.
I want to put on record my gratitude to the Minister for making such a statement to the House.
Question put and agreed to.
SECTION 137.
Question proposed: "That section 137 stand part of the Bill."
I have lost my notes on the section and I would like to have the reference to subsection (2) of the Principal Act explained if the Minister would not mind. I do not have that with me at the moment. I am wondering where that fits into the section in general.
It increases the penalties on directors who fail to provide a statement of affairs to a receiver. There is an onus on the directors of a company to provide a statement of affairs when a receiver comes in. Too many directors in the past have failed to produce that statement of affairs and the penalties have been rather low. Quite simply all we are doing is increasing the penalties from whatever they were to the figures that are actually in the Bill.
I thought that was the area that was being covered. I welcome, and certainly the trade union movement welcome, this attempt at tightening up the legislation. It is long past the time when that type of legislation should have been put into operation. In the Principal Act was there a provision for an imprisonment term or is that a completely new section? In other words, is the fact that "fraudulent" or "reckless" company directors, who do not comply with the regulation are now liable for a prison term. Is that new or was that also the case under the old Act? I ask the question because I am not aware of any case where somebody served time for this type of breach.
There was no provision for an imprisonment penalty in the original Act. There was provision for a fine not exceeding £100, but that went up to £500 in 1982. This Bill actually brings it to £1,000 or, on conviction on indictment, £5,000. As Senators will see, we are putting in a term of imprisonment for a period not exceeding three years, or a fine not exceeding £5,000, or both. There was no provision for an imprisonment penalty in the original legislation which is the answer to this question.
Question put and agreed to.
SECTION 138.
Question proposed: "That section 138 stand part of the Bill."
Is it the practice that the receiver should submit the debts and affairs of unsecured creditors rather than the companies themselves? Section 138 speaks about the duty of the receiver to prepare a statement of affairs. Is it normal practice or is it wise to have the receiver prepare a statement of affairs for unsecured creditors?
A statement of affairs is a statement of affairs. It is the same for everything. It lists the assets and the liabilities of a company in a particular way. In effect it is a balance sheet without being technically a balance sheet and as a kind of a balance sheet it encompasses both secured and unsecured creditors.
Question put and agreed to.
SECTION 139.
Question proposed: "That section 139 stand part of the Bill."
"The court may, on cause shown..." I would like the Minister to expand on the type of "cause shown", and what exactly is envisaged by this section.
I have resisted the temptation to spell out what that cause might be. In the liquidation situation that is precisely the phrase that is used —"on cause shown". I think it is better to leave it to the court to decide in what circumstances it might fire a receiver. I do not think it would be helpful to specify it in legislation.
I, too, would like to get more clarification on the phrase "on cause shown" as asked by Senator O'Toole. Most sections in the Bill are inclined to detail the events in which a certain course of action will be taken rather than dealing with exceptions to the rule, as contained in similar legislation in the UK. That is probably the best way of dealing with it. You are much better off to deal with the legislation on the basis of identifying the events that should not happen rather than detailing the events that should happen. I would like the Minister to clarify the likely events in which a court would interpret "on cause shown". As the Minister is aware, the interpretation may vary from court to court.
I accept that but the Senator is asking me to make a list of human failings which would take a long piece of legislation. The type of thing could be — and I am only speculating here — perhaps incompetence, demonstrated incompetence; unduly favouring creditors over others; involvement in any kind of arrangements within the company which would be unduly favouring creditors and doing so in a reckless or almost dishonest way; being charged with a criminal offence of some sort or turning out to have been a member of some proscribed organisation; the list is quite endless. I think the court would be able to make up its own mind "on cause shown". A receiver also could fall foul of the debenture holders who actually appointed him. If the receiver failed to withdraw from his position, the debenture holders might have to apply to the courts to have him removed. This section would enable them to do that. It is wiser, perhaps, not to seek to make a list because in making that list you almost certainly leave our some cause which might be serious.
Is the Minister saying that a person takes the matter to the court and puts forward the arguments and gives the causes or the reasons or the case for the removal of the receiver and that the court judges on the case presented whether the receiver should be removed.
Yes, section 277 of the 1963 Act uses this phrase for liquidators, and it has worked reasonably well. The wording "on cause shown" is also a well used and accepted legal phrase. I would be happy to make a list of causes if that would help but I would be quite worried that when you start listing causes you almost certainly leave out something, which would be serious. That is my main concern.
I accept that. I see the value in not listing them because a list can be interpreted by a judge as giving a certain direction of thought when, in fact, it is nearly impossible to consider the variety of reasons that could lead to it. The Minister referred to personal failings; somebody could develop some kind of illness, overtiredness or whatever, all sorts of areas which could never be listed.
Question put and agreed to.
SECTION 140.
Question proposed: "That section 140 stand part of the Bill."
Section 140 provides that the liquidator will have certain powers over a receiver. There is an indication that this will have serious implications for lending in so far as where a debenture holder or a financial institution has appointed a receiver to a company that the powers whereby the unsecured creditors in a liquidation would have over a receiver could have implications for people getting money from a bank. I would like the Minister to clarify this section. Perhaps he would indicate the powers of the liquidator over a receiver in a company in receivership and what implications that would have for debenture holders?
What I am trying to do here is to clear up something that is already well covered in case law, that is, allowing the liquidator when he is appointed, to go to the court and seek to limit the scope of the receiver. If the court thinks fit, it will grant the liquidator the authority to limit the receiver's role because the liquidator, in the case we envisage, obviously would come in afterwards. If the liquidator feels that the receiver is perhaps not being co-operative or not pulling the same way, the liquidator can go to court and seek to limit the receiver's scope and powers in the matter. It is only for very rare cases; in 95 per cent of cases if there is a receiver in existence and a liquidator goes in they will want broadly to achieve the same results. Both of them will want to maximise what revenue they can generate and they will both want to make sure that their various creditors are looked after as best as possible. There would be a convergence of interest in the vast majority of cases, but this is a situation where the liquidator feels he needs to go to court to limit the power of the receiver who may envisage doing something which would not help the liquidator with his work.
If a debenture holder sends in a receiver into a company, and we have a new section in the Bill which allows for a liquidator to be appointed over and above the wishes of a debenture holder, that would have serious implications for lending institutions when lending money to a company if they feel that their powers of receivership are going to be interfered with by the successful application to a court by unsecured creditors. In my opinion, in a liquidation the unsecured creditors' circumstances are taken into account much more than in a receivership. I would like to see both of them converging to the same view and the same objective, as the Minister stated, but in reality the practice is that liquidators and receivers can have diverse opinions about what should be the end result.
Let me make this clear this is not enabling a liquidator to be appointed on top of a receiver. That could always be done. There is nothing new about that. What I am trying to do here is to ensure that we get that convergence, and ensure that if a liquidator goes in that the receiver cannot be unco-operative. If a receiver is in on foot of a fixed charge, for example, there is no incentive or no scope for him or her to be that unco-operative because they are there for a fixed charge to look after a particular asset, perhaps for a bank. It is only where the receiver would be there on foot of a floating charge, where they would be looking to the general assets of the company to get their liability looked after and it is in that context that I want to make sure that the liquidator is able to prevent the receiver doing anything that would impair the work of the liquidator at that time. In a general sense if your aim is to look after unsecured creditors — and I appreciate the Senator's interest in making this point, which he made very well — it is perhaps better that we give the liquidator a little edge, because at the end of the day he, rather than the receiver is the person who will look after the unsecured creditors.
Question put and agreed to.
Section 141 agreed to.
SECTION 142.
Question proposed: "That section 142 stand part of the Bill."
In this section what is meant by the words "necessary modifications"?
What I am doing here is extending the rules which at present apply to liquidators. There is a rule which says that if liquidators come across particular items when they are liquidating a company they must report them to the Director of Public Prosecutions. By inserting section 142 I am ensuring that receivers do precisely the same thing. There was a law which stated that liquidators had to report to the Director of Public Prosecutions if they spotted something but there was no legislation which said that receivers had to report to him.
Question put and agreed to.
SECTION 143.
Government amendment No. 204:
In page 113, lines 30 and 31, to delete paragraph (c), and substitute the following paragraph:
"(c) Fóir Teoranta, where the company the subject of the petition under that section has received financial assistance from that company;".
This is the most exciting and interesting part of the legislation in that it is the positive thrust of the Bill which prevents companies who get into financial difficulty from having to go into liquidation or receivership in the first instance. I am setting up an intensive care period of three or four months so that the company's debts can be frozen. This is a major and radical reform of company legislation. We have never done this before and I honestly say that had we done it before it would have made a major difference.
Section 144 allows a company which is in financial difficulties, or other interested parties, for example shareholders or creditors, to go to court to have an examiner appointed. Under section 145 the effect of such an appointment would be to freeze the debts of the company completely and place the company under the protection of the court for a period of three months from the date of the petition to the court. The effect of this would be, among other things, that no receiver or liquidator could be appointed or debts executed. Furthermore, if a receiver is in place he must stand aside. It is a very radical piece of legislation which, in effect, freezes the debts of a company and does not permit anybody to sue it on foot of those debts or in any way to pressurise the company legally during the period while the examiner working with the company seeks to sort it out and rebuild it.
It is a daring rescue mechanism and only time will tell whether it will work fully. I predict that it will be a major contributor to the development of successful companies over the decades ahead. That is why I am excited and confident about this new mechanism which we are putting in place. Many hundreds of companies have gone into liquidation over the years and if somebody had been able to step in and freeze everything for a three-month period with the help of an outsider who could have done deals with the creditors, made arrangements and compromises and written a plan to put the company back into shape, I have no doubt that the vast majority of those companies which were potentially viable could have been refloated given that kind of breathing space under the protection of the court for that limited period.
This Bill has very many good parts which deal with insider trading, duties of directors and so on but I believe this is the real, positive part of the Bill which could do a lot to develop our economy over the next decade or so. I look forward to hearing Senators' comments and opinions on this section. It is a major initiative and I look forward to dealing with it with the Senators.
In dealing with Part IX of the Bill I should like to welcome this new concept of reconstruction in the companies legislation in the form of an examiner. As the Minister has rightly stated, the potential benefits to the Irish economy will be enormous but he should not over-simplify the difficulties a system like this can have in practice. Irish industrial culture has been to allow a problem to go to such an extent that it is almost impossible to reconstruct a company. An air of depression sets into the management of a particular company when they believe that the finances of their company have gone wrong and, because of pride, on occasions they wrongly fail to face the reality of the difficulties they have in their company. They fail to face up to them in time in order to bring about some salvation for a limited amount of the company in operation, in particular for the management, shareholders and employees. Hundreds of jobs could have been saved if management in this country had faced up to the difficulties in their companies at an earlier stage.
I hope that the introduction of the new concept of the examiner will provide a half-way house for many companies and that rather than facing the road of receivership or liquidation that the examiner status will provide them with an opportunity of facing up to their problems much earlier and thus save their companies in the process. Anything which prevents a potentially viable company from going to the wall, going into receivership or liquidation, is a welcome departure for Irish industrial life. This concept, enshrined in Chapter XI has worked very well in the United States. If properly utilised here, there is no reason it could not do the same for many ailing companies in Ireland.
If our company law is not operable to the extent that a balance is maintained between weeding out the cowboy operators and the fraudulent traders in companies in Ireland while, at the same time, maintaining a balance in favour of risk-takers we must realise that companies can invest and set up their plants and facilities in the UK. In the UK they are keen to ensure that companies do not have any inhibitions placed on them.
We have to be always careful about that balance. The concept which we are introducing under court protection, the examiner concept, is, probably the most positive element in the Bill. This positive concept in the legislation which can protect employment and protect companies is to be welcomed. I hope it will have enormous benefits for many industrial jobs and firms here and that it will be utilised to the maximum in order to give a great bonanza to many of our industrial enterprises.
Very briefly and very generally, I should like to echo the words of the last two speakers. The Bill so far has attracted a great deal of interest on the grounds that it has dealt with negative items like insider trading, rogue directors and the abuses which go on in companies. It is very definitely a highly imaginative and very positive step by the Government to put this into the Bill. I do not know — and I do not think anybody in this House, anybody who drafted this Bill or anybody who has given submissions on this Bill knows exactly — how it is going to work or whether it is going to work. Certainly the idea behind it is an extremely encouraging and very clever one. I can think of several companies which went into receivership and liquidation which might have been saved if this procedure had been adopted in the past. I do not know whether they would have been saved but they would have been given the opportunity.
Having said that, I am not sure whether the balance is right. I am not sure that it will not be possible for unscrupulous directors of a company, to exploit this section of the Bill knowing that if they take a reckless — that is an unfortunate word in the context of this Bill — an irresponsible trading decision, they will still be able to call an examiner in. In the sense that it has a definite thrust for aiding genuine short term ailing industries I congratulate the Minister and wish him the best of luck. I do not know whether it will work but we will see in years to come.
It is good really that we are all agreed on this point. It is an imaginative and a fairly major step forward. I think it will work. There will be difficulties. There will always be difficulties in cases like this. In any sphere or walk of life in trying to resolve any problem and to give some leeway to some people, there will be people who will try to exploit it and turn it to their own self interest which may not be the interest of the company. I welcome the inclusion of this part of the Bill. I believe that, which ever perspective one takes on it the idea of ensuring that a company in financial difficulties addresses its problems at an early stage to allow for a realistic examination of the prospects of the company's survival can only be a good thing.
I have no reservation in terms of the approach or the movement but I suspect I will not surprise the Minister by what I will be putting forward in an amendment shortly, that is, the whole question of who should initiate that. I know I have failed to convince the Minister on this point although he has been very accommodating. I will take the view of the risk taker again. Both previous speakers referred to the need to protect the risk taker and said that the risk taker will at least at the end of the day have some protection in regard to getting out of it what he or she put into it. I put it to the Minister that, in times of very high unemployment, a person who invests a totality of everything he or she has in a company also deserves protection in the terms that that is taking a risk. I hope the Minister will take on board when it comes to the specific — I am not jumping ahead here — that in terms of interested parties the employees and the workers in a company have to be seen as interested parties.
At times, for instance, it could reasonably be argued against me — although I did not agree — that giving workers certian rights could be used in some way to obstruct the workings of the legislation. This is a case when clearly the workers would have concerns absolutely identical to those of other interested parties in the company. I hope to impress on the Minister that there should be a clearly identified role in the process, an involvement in the process right from the outset. I know the Minister's view is that this is not an industrial relations Bill but all legislation that seems to govern the interaction of people in whatever walk of life is, in effect, legislating for relations, in this case industrial relations. We need to keep all those areas in mind as we go along. In other words in looking at this grand new direction we should move forward here.
The Minister described this as an imaginative approach towards dealing with the problem. I go along with that. It is an imaginative approach and I congratulate him, his Department and the people who drafted this. Unfortunately, it will not get much publicity but it is the sort of workpersonlike approach we have come to expect from the drafters in this Department. I welcome it. I hope the Minister will take on board the remarks I have made and respond to them when it comes to the details of the amendment.
In general terms we have looked here at a problem. We are discussing it from the point of view of different people who are dependent on a resolution of it. They are the owners of the company, the suppliers, the people involved in the marketing area and they must also be the workers. We should look at it from that point of view as we go along.
I will deal with the specific matter when we get to that amendment. We are dealing here with Government amendment No. 204.
I am sorry. I thought we were talking about the section in general.
We were. I am sorry. I initiated that. We were talking about it and I am taking the Senator's comments on board in a general sense as I have taken the comments of Senator Ross and other Senators. In regard to amendment No. 204 I omitted to say that it really is just a drafting amendment to paragraph (c) of section 143 to tidy up the reference to Fóir Teoranta. In that context that drafting amendment is on the floor at the moment. I thank the Senators for their comments with regard to the section overall. It is an intensive care mechanism, a rescue mechanism, and as a rescue and intensive care mechanism I look forward to it working. In regard to section 143 and amendment No. 204 I say it is just a drafting amendment.
In the overall context of the Bill I would like to be associated with my fellow Senators in welcoming the concept of an examiner for ailing companies. It will help to save many companies who are experiencing cash flow problems, changes in market trends——
Senator, I remind you that your contribution is more relevant to the section so perhaps you will wait until we are discussing the section after the amendments have been dealt with.
Amendment agreed to.
I move amendment No. 205:
In page 113, between lines 31 and 32, to insert a new paragraph as follows:
"(d) a trade union representing employees of the company."
I am sorry that I am about to repeat myself but just for the record I am not going to push it. We have been through it all previously but in each case I hope I have at least brought the Minister some way along. I ask him to accept that I am not suggesting that a Companies Bill should attempt to regulate industrial relations. I am saying we must look at this issue as a totality. A company is an entity with various different groups involved, first of all in the workings of the company, and on the periphery those people who are dependent on the company for everything. They might be the suppliers, the people selling the produce, people working in transport or people who have rented the property. They could be a number of various "odd bods". Surely in the middle of all that, the position of the employee in the company is important.
This in a sense is a generality because we are defining now for the purposes of the section what an interested party means. We are saying certain people can take certain action basically to initiate the procedures governed by this section, in other words, to start off the process by which a company could be examined to assess whether its survival is possible, whether it should be given this period of intensive care and be cocooned from the big bad world for a short time. We are saying that certain people can do it, that a creditor of the company can do it. Fair enough, the arguments stand up. Nobody can argue against that. Somebody who is owed money will certainly have a very clear interest and a clear commitment to it and should be able to initiate the type of action and process envisaged by Part IX of the Companies (No. 2) Bill.
Similarly a member of the company who, again because he has an investment in the company, is part of the company is another person who without doubt should have the opportunity to make this legislation move. "Where the company has received financial assistance from Fóir Teoranta, that company...". I put it to the Minister that employees of the company or — dare I say it? — the representatives of the employees of the company would have similar rights and would not be misplaced. The reasons are quite simple. A worker cannot at any time liquidate his or her assets in the company. The owner of a company can sell whatever the assets are and take whatever is left over, the "owner" there meaning all the people who own it whether it is public, private, self-owned or whatever type of company it happens to be. The owners, or let us say the proprietors, can take their profits, sell it, move out or whatever.
The creditors can actually sell what they are owed. People will buy their debts from them at certain times. The members of the company can also cut from the company at various times, liquidate their assets and see what they can take out of it but the worker cannot do that. The worker more than anybody else has a complete commitment to the company in that for his or her total lifestyle, whether it is for his or her mortgage repayments, for the cost of education, a house or a holiday, the money comes from the wage or the salary at the end of the week, month or year. There is no way workers would jeopardise that position. I do not think there is any way they would be frivolous about the use of this power.
Let us grasp the nettle on this point. Let us put it to workers that they are part of the company. Gone are the days when representatives of employees could sit around the table with management and say: "We want this level of wage increase and even if it puts the company to the wall we are still demanding it". Those days are gone. Nowadays trade union representatives have to know as much about the workings and the running of a company as the management on the other side of the table. The trade union people, in that sense, are merely representing the employees or the workers. They have a legitimate interest in the company. More than anybody else they are committed to making that company continue in operation.
For those two reasons alone, despite what we would say about the need to protect employment which we would all be agreed on, there is no argument on these issues. The only argument is that we grasp the nettle. I suggest to the Minister that that is reasonable. Forget about where I stand on the political spectrum as such. It is not a matter of right wing or left wing, or one side or the other. We are talking about a very deliberate approach, a pragmatic approach.
Where does the Senator stand on this political spectrum?
I stand very firmly on the left of the political spectrum. We are talking about interested parties. I do not want to flog this thing to death. I am saying that the employees or the representatives of employees could quite legitimately be included in this section. I am proposing that "a trade union representing employees of the company" should be added. I know the Minister might not like to have the trade union representative included, as he has indicated already but at this stage I am testing the waters to see how far this can be taken with the Minister.
Does the Minister wish to reply before I contribute?
Acting Chairman
You can make your comment.
Like Senator Hogan I find it very difficult to forget where Senator O'Toole stands on the political spectrum especially when he is making speeches about trades unions. I also find myself in a peculiar position of not standing very far to the left on the political spectrum, not quite as far left as Senator O'Toole anyway, and agreeing wholeheartedly with his amendment. It seems that it is unreasonable in this day and age to exclude the employees or the trades unions from being interested parties. I should remind the House, and it is not irrelevant, of a debate which we had here just before the recess when one of the great arguments on the side of those who supported Irish Distillers in their takeover battle was the interests of the employees and obviously, by implication, of the trades unions. It seems ridiculous that you should include the shareholders but that you should deny, in a definition of interested parties, those who work day and night for the company in question. If anybody should have priority as interested parties it is the employees because it is their livelihoods which depend upon this company.
All we are asking for, as I understand it, in Senator O'Toole's amendment is that the trades unions or someone representing the employees should be allowed to petition the court. We are not suggesting that the trades unions can actually call in an examiner themselves. We are only saying they should have the right to petition the court and that the court should then decide. It seems unreasonable to give the court this role and then to deny to those whose vital interests and whose livelihoods depend upon the company the right simply to ask the court to call in the examiner. It does not give any vitally interested parties the actual right to call in the examiner. It gives them the right to ask the court. If ever there was a case for the trades unions, who are reasonable people, to intervene this is it.
I support the amendment wholeheartedly because I can think of cases in which trades unions can see that management is behaving in an irresponsible way with the company, or where trades unions can see that the interests of the company and the employees, which coincide in many cases, are not being looked after by the management, that they are behaving in a manner which is irresponsible and which threatens the livelihoods of those who work in the factory. As a result of that, it is only reasonably to say: "Yes, they have a case to put to the court for the calling in of an examiner to keep the company going".
It is surprising that in the legislation as it is drafted no permission is given to directors of a company to bring a petition to court. Perhaps I would not go as far as what Senator O'Toole is proposing but in companies where there are worker directors they should have an opportunity to bring a petition to court. The Cork Committee report referred to the fact that it is of fundamental importance that the directors can apply for the position of administrator. That procedure is adopted in the UK and I do not see why it should not be adopted here.
We are talking about section 143 which deals with interested parties. I noticed Senator O'Toole's main interest here which is: who can initiate a move to the court to have an examiner appointed? His concern will probably be met by a new amendment which I am bringing in today, amendment No. 207. I am speaking here about the amendment which introduces a new section 145 on who and who may not present a petition. Subsection (1) (b) of that new section will for the first time introduce a new concept. It will now allow contingent and prospective creditors to apply to the court for a protection order for the company. The Senator will recall that we mentioned this aspect when we were discussing the actual status of employees in other sections of the Bill. While I had previously been happy that the term "creditor" would normally cover employees — in perhaps 95 per cent of cases of companies in this situation the term "creditor" would include employees — I am happy at this stage to take a further step by putting in the phrase "contingent and prospective creditors" as parties who may make an application to the court for a protection order.
Senator O'Toole knows my view on the issue of mixing trade union legislation with company law legislation and trying to do too much together. For that reason I am resisting the idea of his amendment from the point of view of giving a trade union a role in the specific area of company legislation. A prospective creditor or a contingent creditor can go to the court and seek to have an examiner appointed. An employee would, by any stretch of the imagination, be a prospective creditor of a company. Therefore, as far as I am concerned, an employee can go to court and seek to have an examiner appointed under the new section 145 which is being introduced here in amendment No. 207.
In section 143 "interested parties" is a phrase that runs right through the section. It differs quite a bit from just who may initiate it. Section 143 is not a list of those who may initiate it. It is a list of interested parties for the general purposes of the section. Section 145 is where we seek to bring in this list of who may initiate it and that is really what is important. As far as I am concerned an employee may, under the heading of prospective creditor.
I have a mixed response to what the Minister has said. We are back to where we left off in July on the previous part where we had a similar discussion. Do I take it that what the Minister is saying here is that any interpretation of "contingent or prospective creditor" would have to include employees? I can certainly see the logic in that. I do not have any difficulty in seeing that somebody who has worked for a company would be a contingent or prospective creditor. I can certainly see that the Minister has come down that road to meet the legitimate problems which I raised when we discussed the last section and I welcome that and I am appreciative.
I would be prepared to withdraw the amendment if I felt that there was in some way an interpretation of "contingent or prospective creditor" to include or to indicate that it could include employees of the company. Then we would have the thing, in a sense, wrapped up. I know the Minister cannot attempt to give a definition of a creditor, etc. I know it can be all sorts of things and there are all sorts of ways to approach it. Could we have an indication somewhere in the legislation that the phrase "contingent or prospective creditor" would be deemed to include an employee? That really is the point.
Were that to be included then that would answer my arguments not in the way that I would prefer them to be answered but at least it would resolve the problems which I have raised. I would put that to the Minister. Perhaps he could indicate that it has been done already. I have not gone completely through all the new proposals.
Progress reported; Committee to sit again.