Companies (Amendment) Bill 2014: First Stage

I move:

That leave be granted to introduce a Bill entitled an Act to provide for a system of examinership that will reduce the costs and time involved for companies falling below certain threshold sizes, by amending the Companies (Amendment) Act 1990.

The Bill seeks to improve the examinership process. It seeks to build on some good work the Minister has already done in moving the examinership process from the High Court to the Circuit Court. I am working with senior counsel on putting the Bill together and with a solicitor, Barry Lyons, who has handled over half of the examinerships that have taken place in Ireland over the last 12 years.

The problem with the current examinership process, for many companies that are viable, is that it is too expensive and can cost north of €150,000, and that creditors can act in a mischievous manner and can keep the company in court and essentially muscle it out of the examinership process. In the process, there are foreign banks looking to get out of the country which have security on something called on-demand loans. What is happening to many viable small and medium companies throughout the country is that an examiner - an independent accountant - is appointed, the courts approve the examinership process so the jobs and the company can be saved, but the bank insists on security against the asset. The bank activates the on-demand nature of the asset and, in doing so, forces the viable company to try to borrow far more money than it can in these capital constrained times.

The Bill addresses all of these issues. What the Bill does is to bring the examiner, the directors of the company and the creditors together outside of the courts, so they do not incur all of those costs. It allows for a quasi-judicial process where there is recourse to the courts at any stage for any party. We have put a clause into the legislation which means the court ultimately must give approval and rubber-stamp it. However, instead of all of the parties having to go to court armed with their various counsel and, therefore, costing everybody a lot of money, the method is much more like the new insolvency service, where the papers, if non-contested, go to the court, the judge makes sure everything is in order and then gives judicial approval and judicial authority to the examinership process.

It is my belief that if this Bill can be taken on and brought into law some time this year, there are many small and medium enterprises across the country that can be saved that otherwise will not be saved. I will not be presenting the Bill as a fait accompli. I accept it will need to be improved through the legislative process. Obviously, as I am not a Cabinet member, I do not have access to the Attorney General's office or to the sort of policy weight the Cabinet would have. The Bill will be presented here on Tuesday on Second Stage and I would very much welcome the expertise of the Government and the Civil Service in getting it right, ensuring it is constitutional and ensuring it does not unfairly prejudice various parties involved.

The people who, with me, have put this Bill together have, I believe, more expertise in this area than anyone in the country. We have worked very hard on it. We have had some very generous input from the Minister. I do not know whether he will accept the Bill but, certainly, it is our belief that if this Bill is accepted through Second Stage, and if it can be amended as necessary to guard for its constitutionality and to bring in whatever other good ideas Members of the House may have, there are many jobs that can be saved and fantastic companies which will be able to successfully avail of the examinership process, which they are not currently able to do.

I welcomed and voted for what the Minister did in December, which was to move the process from the High Court to the Circuit Court. This is the next step. This is the step that says we can reduce the cost of examinership from, say, €150,000 to €20,000, and we can reduce the re-financing requirements post-examinership. I will be sending Deputies an explanatory memorandum, a question and answer sheet and the draft Bill in the next 48 hours or so. We have a worked example which shows that under the current legislation the company would have to re-finance approximately €400,000 whereas under the new legislation it would have to find some €70,000.

As I said, I am not presenting this as a perfectly finished piece of legislation as, obviously, I do not have the resources to do that. However, it is being presented in a spirit of co-operation, although I accept some aspects will have to change. I hope the Minister and the Government will have a think about whether this can pass Second Stage and whether, over this year, we can work to tick the boxes, make it work and, I believe, save an awful lot of jobs in this country over the next few years.

Is the Bill opposed?

Question put and agreed to.

Since this is a Private Members' Bill, Second Stage must, under Standing Orders, be taken in Private Members' time.

I move: "That the Bill be taken in Private Members' time."

Question put and agreed to.