The proceedings of the Special Committee are to recommence at section 154 which marks the beginning of Part IX of the Bill. There are no amendments to this section. The Minister may wish to give a brief explanatory statement outlining the provisions of this Part of the Bill for the information of Members of the Committee and we can then take it section by section.
SECTION 154.
Part IX of the Bill deals with company rescue and contains what arguably are the most innovative provisions of all in the Bill. Part IX will introduce a new legal mechanism for the rescue or reconstruction of ailing but potentially viable companies. The provisions involved generated a widespread positive reaction among the business and professional communities when they were first pubished and, by and large, what comments have been received since then were intended to fine-tune the proposals rather than to disagree in any fundamental way with the underlying approach or philosophy.
There are a number of essential elements as to the way the system will operate which might be helpful to the Committee if I were to describe them. To begin with, section 155 gives the court the general power to appoint an examiner to an ailing company, gives a general outline of the examiner's purposes and aims and gives the court some guidance as to when such an appointment might be appropriate. Section 156 is concerned with the procedure and detail of the petition to the court for the appointment of an examiner, including who is entitled to seek the appointment, for example, the company, its directors, members, creditors and employees. Under section 158 this appointment will effectively freeze the debts of the company and place it under the protection of the court for a total period of three months from the date of presentation of the petition to the court although this period could in exceptional circumstances be extended by a further month. The effect of this will be among other things that no receiver or liquidator could be appointed or debts executed. Furthermore, if a receiver or provisional liquidator was in place he could be directed by the court to stand aside under section 159.
It is important to stress at this stage that the existing management will continue to run the company while the examiner carries out his functions but provision is included for the examiner to apply to the court to take over the running of the company in the specific circumstances detailed in section 161, for instance, where the examiner is of the view that the affairs of the company are being conducted in a manner which prejudices the interests of the company or its creditors as a whole or for the purpose of preserving the assets of the company. Under sections 167 and 168 the examiner has 21 days or such longer period as the court may allow to assess and report to the court on the state of affairs of the company, its financial position, his opinion on the course he thinks should be taken for the company together with a rescue plan where this is warranted.
Under section 169, if the examiner's initial report is negative the court must hold an early hearing to consider it. After such consideration the court may make any one of a number of orders. For instance, it can order the discharge of the company from the protection of the court or the winding up of the company and so on. On the other hand, if the examiner thinks that some or all of the company can be saved he must, under sections 170 and 171, prepare his proposals for a compromise or scheme of arrangement. He must then organise meetings of members and creditors to consider his proposals and report back to the court within a further three weeks or such further period as the court permits. Where a plan has been negotiated the court may, under sections 176 and 177 confirm it unless any interested parties successfully challenge its validity. Once the court confirms the proposals with or without modifications the proposals will be binding on all concerned — the company, the members and the creditors. On the other hand, where the court refuses to confirm the proposals it may order the winding up of the company. Finally under section 178, where a plan has been confirmed by the court the appointment of the examiner will be terminated and the company will cease to be under the protection of the court.
Part IX also contains many practical provisions to facilitate the operation of the new procedures being introduced here. We can discuss these as the individual sections are considered. In this regard I should perhaps mention that in Seanad Éireann almost 50 Government amendments were passed which significantly refined and improved this Part of the Bill. While I do not propose to go that far in the Special Committee, I do have some 20 amendments which further tighten up certain provisions. I wish to say for the record that I am still considering further amendments for the Report Stage, details of which will emerge as we go along.