Will the Minister give us a brief run down on this section?
This may answer some of the points Deputy Bruton raised. The ultimate success of any scheme of proposals prepared by an examiner depends on the court's attitude to the proposals. In examining the proposals the court will have available to it the detailed report by the examiner under section 170 and this will contain all the matters stipulated in section 171 of the Bill. Because the interests of some members and/or some creditors are likely to be adversely affected by the examiner's proposals, it is inevitable that some of the people concerned will be dissatisfied with them. However, the members or creditors will already have had an opportunity to air their dissatisfaction or grievances at their respective meetings. It would be unreasonable, therefore, to permit them to go over the same ground again before the courts on the basis that to do so would unnecessarily drag out the proceedings, cause delays and add to the expense of the whole procedure.
It must be remembered that what we are trying to achieve in this Part is some means of rehabilitating companies which, while they may be in difficulties, nevertheless are deemed to have some prospects of ultimate survival. Accordingly, this section lays down the grounds on which members or creditors whose interests would be impaired by the examiner's proposals may object to the confirmation of the proposals by the courts. The grounds are as follows: there was some material irregularity at or in relation to the meeting in question; acceptance of their proposals by the meeting was obtained by improper means; the proposals were put forward for an improper purpose, and the proposals unfairly prejudice the interests of the objector. All of the foregoing would be grounds on which a party who was unhappy with the proposals could object. He would, as previously mentioned, probably be a person who raised his objection initially at one of the meetings in any case.
However, it is possible that some of the parties who voted for acceptance of the proposals at the meeting would on reconsideration, for whatever reason, wish to object to their confirmation by the courts. Such people are provided with two grounds to do so. They are: if they can show that the acceptance was obtained by improper means, or after voting to accept proposals the applicant became aware that the proposals were put forward for an improper purpose. These are similar to the second and third grounds on which a number of creditors could object to the confirmation of the proposals by the court. In circumstances where the court upholds an objection under this section, it is necessary to enable the court to act as it deems fit to take account of the changing circumstances that will now have arisen. In this regard it is provided that the court can make such order as it deems fit to regularise matters. This could involve not only setting aside the decision of the meeting but ordering that the meeting be reconvened.
I appreciate the Minister does not want long court hearings and lawyers being wheeled in to defend one particular creditor who has objected to a set of proposals and the case dragging on for weeks, but how is the judge to decide whether this package is a good one if he is unaware of the strong fears expressed by some objector? How can a judge assess the situation properly if he is not aware that deep concern was expressed by a class or a group or an individual in relation to the proposals before him? At the end of the day, surely a court must be aware of all the facts in order to make a decision. It is a court of law. Surely it must be unique also in Irish law that somebody would be deprived of the right to make his or her case to a court.
Section 171 requires that the proposals placed before the required meetings, any modification of those proposals adopted at any of those meetings, the outcome of each of the required meetings, and all other information would be included in the examiner's report. That would give everyone an opportunity to put their case forward and all the points would have to be made available to the judge before he would make a decision in relation to the examiner's report. The interests of everybody would be understood before the judge would make his decision. The judge would be fully informed of every meeting that has taken place.
Is it clear in another section that there is an obligation to have a full record kept of the proceedings of the meeting the Minister refers to so that these minutes would be made available to the judge if so requested? I do not recall a provision in the Bill that a detailed minute in relation to an objector would have to be kept. If there is not, surely there should be.
As I said section 171 provides that the outcome of each of the required meetings shall be included in the examiner's report.
The objecting creditor can be heard. Under section 176 if a creditor objects he can be heard in relation to proposals to compromise a scheme of arrangement. I refer Deputy Barrett to section 176 (2).
Section 177 is quite clear — he can object only on certain limited grounds. He may be heard, but what can he say? Is the judge going to say, "I am sorry, you cannot say that because it is contrary to section 177 of the Act"? Does the Deputy understand me?
I do, but Deputy Barrett will note that under section 177 (1) (d), one of the alternative grounds on which they can object is, on the basis that the proposals unfairly prejudice their interest. The Deputy will accept this is a pretty wide ground for objection and takes in practically the whole arena of interests that a creditor can show. The first three grounds are confined to narrow, specific technical matters where there are some irregularity in the meeting, or where somebody fooled somebody in voting for a proposal they should not have voted for, or misled them in some way, but paragraph (d) states that they can object on the grounds that the proposals unfairly prejudice their interest. That is pretty wide.
Section 177 (2) provides that "Any person who voted to accept the proposals may not object to their confirmation by the court except on the grounds — (a) that such acceptance was obtained by improper means,". Is the Minister satisfied that that is specific enough? Could he expand on that terminology, "improper means"?
We are quite satisfied that that covers the situation well. Have you any problem with it?
We are back to what Deputy Barrett said earlier about the judges in question. I support what Deputy Barrett said. I am glad that the Minister has responded positively to that suggestion.
One would need to be an expert in this area to know what "improper means" actually means. I will cover the point further, particularly paragraph (b). It provides that where the acceptance of the proposal is obtained by "improper means", this would also provide sufficient grounds to object to the court confirming their proposals. The most likely one at the meeting to be presenting the proposals would be the examiner.
However, other interests at the meeting could also stand to gain more by having the examiner's proposals accepted than by letting the company go into liquidation. If any party, by whatever means, particularly by, for example, giving or receiving information as to the alternatives available, obtains the approval of the resolutions and this was subsequently discovered by a creditor or creditors, this would provide sufficient grounds for him to object to the court confirming their proposals. Maybe this covers the point raised by Deputy Kitt.