Dáil Éireann díospóireacht -
Wednesday, 30 Apr 2025

EU Regulations: Motion

Minister for Justice (Deputy Jim O'Callaghan)

I move:

That Dáil Éireann approves the exercise by the State of the option or discretion under Protocol No. 21 on the position of the United Kingdom and Ireland in respect of the area of freedom, security and justice annexed to the Treaty on European Union and to the Treaty on the Functioning of the European Union, to take part in the adoption and application of the following proposed measure:

Proposal for a Regulation of the European Parliament and of the Council amending Regulation (EU) 2015/848 on insolvency proceedings to replace its Annexes A and B,

a copy of which was laid before Dáil Éireann on 12th March, 2025.

I very much welcome the opportunity to address the Dáil on this motion to exercise Ireland's option to opt in to an important EU measure under Protocol 21 of the Treaty on the Functioning of the European Union. The opt-in we will discuss today is a concise but important one concerning the insolvency regulation from 2015, No. 848. On 15 April last, I received approval from the Government to arrange for Ireland to participate in the adoption and application of a proposal for an amending regulation of that insolvency regulation and to move this motion in the House today.

Deputies will be aware that if Ireland wishes to take part in an EU measure with a legal basis that falls under Title V of the Treaty on the Functioning of the European Union, the Oireachtas is required to give its approval under Article 29.4 of the Constitution. The measure before the House is one relating to judicial co-operation in civil matters. This proposal for an amending regulation has its legal basis in Title V and so it is subject to the provisions of Protocol 21 attached to the Treaty on the Functioning of the European Union.

It is proposed that we now notify the European Council of our wish to take part in this proposal to make updates to Regulation (EU) 2015/848 on insolvency proceedings recast under Article 3 of the protocol and to opt in to the proposal within three months of its presentation by the Commission. The three-month period for this proposal is due to end on 1 May 2025. While Ireland has already opted in to the original recast insolvency regulation, under the protocol a fresh opt-in is required in respect of any measure amending it.

As Deputies may be aware, the recast insolvency regulation provides for mutual recognition and enforcement of insolvency proceedings between European Union member states in cases with a cross-border dimension, for example, where an insolvent company or individual has branches, assets or liabilities in more than one member state. The 2015 recast regulation also updates EU law to strengthen recognition of pre-insolvency procedures and debt restructuring. It sets out strengthened rules on insolvency proceedings which involve groups of companies based in different member states. It also clarifies and extends the rules on secondary proceedings, that is, where the main insolvency proceedings are before a court in one member state but the company or individual also has a base, with different assets or obligations, in a different member state.

This proposal for an amending regulation of the 2015 recast insolvency regulation of the European Parliament and of the Council amending regulation on insolvency proceedings to replace its Annexes A and B makes some technical updates to the first two annexes in the 2015 insolvency regulation. It is important for me to stress the current proposal merely modifies these annexes to accurately reflect the content of national notifications and adapt the annexes containing the lists of national procedures or types of insolvency practitioners, respectively, in this field. These changes do not affect any of the obligations and rules set out in the regulation itself.

The proposal for an amending regulation to update and replace Annexes A and B of the recast regulation on insolvency proceedings with updated versions was presented to the Council by the European Commission on 14 February this year. Annexes A and B are decisive in defining the scope of application of the EU regulation. Specifically, Annexes A and B to the regulation set out definitive lists of the respective different types of insolvency proceedings, and the different types of insolvency practitioner, in each member state. Those proceedings and practitioners are to be recognised by other member states for the purposes of the recast regulation. It is, therefore, important that these annexes are regularly updated in order to reflect the actual legal situation in the member states.

The changes made by the amending regulation, which I am proposing Ireland opts in to, replaces Annexes A and B to the 2015 regulation with updated versions. These updates are required to take account of new types of insolvency proceedings and insolvency practitioners arising from changes to national insolvency law in seven member states. In July 2022, Slovakia notified the European Commission on recent changes of its domestic insolvency law introducing a new preventive restructuring procedure as well as a new type of insolvency practitioner. This was followed by notifications from Estonia, Spain, Malta and Italy in September 2022, from Belgium in July 2023 and from Luxembourg in January 2024.

It is important to emphasise that the amending regulation does not make any alteration to the lists of Irish insolvency proceedings and Irish insolvency practitioners in the annexes that are to be recognised and enforced by other EU member states under the recast insolvency regulation.

The efficient treatment of cross-border insolvencies of debtors with their centre of main interests in a member state requires that the scope of the regulation reflects the actual state of play of domestic insolvency laws. This proposal aims at ensuring that the scope of the regulation is adjusted to the actual legal framework of the member states on insolvency by the time of its application. I believe it is desirable that Ireland should opt in to this proposal for several reasons.

The recast insolvency regulation is an important and well-established part of civil justice co-operation between EU member states. The recast regulation ensures a more coherent and predictable approach in cross-border insolvency cases and avoids unnecessary legal uncertainty and added litigation costs. The amending regulation is a useful updating measure to ensure the effective and efficient operation of the recast insolvency regulation across EU member states.

As Deputies will appreciate, it is desirable for Ireland to apply the same, updated rules as other member states. Deputies may wish to note that the last amending regulation that made technical updates to the two annexes was adopted in December 2021 and in May 2022. Ireland exercised its right to opt in to that amending regulation, post adoption, in accordance with Article 4 of the protocol.

As this regulation also relates to company insolvency, I can confirm that my colleague, the Minister for enterprise, tourism and employment, Deputy Peter Burke, has noted this technical amendment, and supports the opt-in.

I commend this motion to the House. For the reasons I have outlined, I am requesting Members' approval to opt in to this proposed regulation.

In conclusion, I should point out that, in effect, what is happening here is that a slight amendment is being made to the 2015 insolvency regulation. The amendment is minor. All that is happening is that two annexes to the regulation, Annexe A and Annexe B, are being amended. The reason they are being amended is that the law in respect of insolvency and insolvency practitioners has been changed in seven EU member states, although not Ireland. We want to ensure that the changes in the domestic law of those seven countries are reflected in the regulation so that we can continue with co-operation between member states in respect of insolvency matters. I look forward to hearing what other Members have to say.

Deputy Matt Carthy

I thank the Minister for the update. The opt-in before us facilitates the mutual recognition of changing insolvency practices in different European Union member states. As Ireland and other EU member states update, adjust or develop different civil mechanisms, it is generally right that we should continue to facilitate mutual recognition. Sinn Féin will be supporting this opt-in as we believe that, where such mutual recognition exists today, ordinary people and businesses should continue to avail of its benefits. However, I appeal to the Minister to bring any such opt-in proposals before the House in a timely manner so as not to deny needed scrutiny at any stage for the sake of expediency, which is usually necessitated by Government delays in bringing forward proposals.

When discussing insolvency, we cannot avoid discussing what is actually driving insolvency for both businesses and individuals. This includes the high cost of living, the cost of insurance, the cost of rent and sky-high utility bills in this State, all of which the Government has failed to tackle. These costs are the reason so many businesses are struggling, which unfortunately leads to many subsequently facing insolvency.

In addition, we have the specific problems caused by the failure to crack down on vulture funds. Recent Fianna Fáil and Fine Gael governments have not changed our insolvency framework for the better. I note the original 2015 regulation applies to both companies and legal persons and that it specifically states that "The scope of this Regulation should extend to proceedings which promote the rescue of economically viable but distressed businesses" and give them a second chance when needed. That is a worthy endeavour. Mutual recognition being the purpose of the regulation and given that the foundation of this regulation is to support that second chance, it is a shame that, in 2019, the Government approved changes to legal aid in personal insolvency cases, removing a debtor's automatic right to funding for a barrister. The Minister may recall that my party colleague, the Sinn Féin spokesperson on Finance, Deputy Doherty, described this as an attack on the most vulnerable and a coup for the banks and the vulture funds. In effect, it limited the ability of people, particularly ordinary people, to enlist the aid of a barrister in taking the fight to the banks. Sinn Féin opposed this measure and highlighted the fact that, when people actually brought the banks to court, they won nearly two thirds of the time. This lays bare the fact that this measure was intended to disarm ordinary people and to protect the banks.

It is clear that, where insolvency is involved, successive governments have left ordinary people at the back of the queue because, despite the Government having made some improvements for workers via the Employment (Collective Redundancies and Miscellaneous Provisions) and Companies (Amendment) Act 2024, a crucial area that remains unaddressed is that of workers being treated as unsecured creditors for the purposes of collectively bargained redundancy agreements.

The Government's failure to reform and rebalance our own insolvency framework continues to have real-life consequences for people today. It particularly impacts on the 27% of people who managed to work themselves out of arrears and get their mortgage back on track since the financial crash and who are now facing an undue financial burden because they have been forced back into arrears arising from exorbitantly high interest rates. More than 100,000 struggling mortgage holders are paying interest rates of 6%. Some 7,000 of these are paying interest rates of more than 8.5%. These are the people whose mortgages were sold off during the austerity years and who, through sheer grit and playing by every rule, managed to get themselves back on a solid footing but who once more find themselves in a precarious position as result of the greed of vultures. The banks gave these people loans but, when the banks got into trouble, they off-loaded the loans to vulture funds at a significant discount. Those same vulture funds have been fleecing those customers ever since. Those people are now being charged absolutely crazy sums of money. Many of them are suffering as a result of that greed. That greed has been facilitated by the inaction of successive Fianna Fáil and Fine Gael governments.

Scrutiny of proposals coming from the European Union is crucial because what the European Union does is not always in Ireland's best interests. We learned that the hard way during the banking crisis when the European Central Bank and European Commission were quick to burden Irish people with 42% of Europe's bank debt. When I was a Member of the European Parliament, I campaigned strongly against a proposed vulture fund directive. This was a proposal from the Commission to develop a secondary market for loans, whether they were performing or not. It is disgraceful that the proposal was supported by the Irish Government. At that time, I warned about the dangers of moving hundreds of billions of euro of bad debt into the shadow banking sector through the securitisation of non-performing loans. That approach is incredibly misguided and I warned that it would cause major new risks to financial stability. After all, mortgage-backed securities played a key role in the 2007-08 crisis.

I welcome the updating of the regulation that facilitates mutual recognition of insolvency across European Union member states. However, we have to focus equally on what is driving people into insolvency. The cost of living and the cost of doing business must be addressed and there must be a crackdown on vulture funds to ensure they are forced to provide interest rates at the same levels as banks. The Government needs to ensure that all mortgage holders who have played by the rules have the right to transfer back to the banks regardless of the status of their mortgages. Otherwise, all we will have to offer those people is assurance that any future insolvency they may have will be recognised in Malta, Luxembourg or another EU member state. We have to do everything in our gift to ensure that businesses and families are prevented from entering insolvency, wherever possible.

Deputy George Lawlor

The Labour Party has no difficulty with this motion and will not be opposing it. It is noted that, in July 2022, Slovakia notified the Commission of recent changes to its domestic insolvency laws that introduced a new preventative restructuring procedure and a new type of insolvency practitioner. That notification was followed by notifications from Estonia, Spain, Malta and Italy in September 2022, from Belgium in July 2023 and from Luxembourg in January 2024. All of these related to recent changes to these states' domestic laws, introducing new types of insolvency proceedings or insolvency practitioners. These new types of insolvency proceedings and insolvency practitioners comply with the requirements set out in Regulation (EU) 2015/848.

As I have said, we in the Labour Party fully support this and have no difficulty with it but we must also look at many of our own domestic insolvency issues. A company may choose liquidation when insolvent and unable to meet its financial obligations. Liquidation allows for the orderly sale of assets to repay creditors. A company can be dissolved either through liquidation or the strike-off process. Once a company has been dissolved, the assets of that company become State property.

I will highlight the issue of Hookless Village, Hook Head, County Wexford. The company was declared insolvent and subsequently liquidated in the 2000s. Since that time, the premises has lain empty. It is a derelict and extremely dangerous eyesore. A once modern swimming pool, gym, bar and fully equipped restaurant today resembles something you would find in a deserted ghost town. Around it sit approximately 100 homes that were part of the original holiday resort. These homes are fully used by private owners and a number of Ukrainian families. There are many children and youngsters in the community and this dangerous eyesore forms the perfect adventure playground for them. Who is the owner of this dangerous property? We are. It is owned by the State or, to be more precise, by the Minister for Public Expenditure, National Development Plan Delivery and Reform. In response to a parliamentary question I submitted in March of this year, the Minister of State said:

I am informed by the Commissioners of Public Works (OPW) that Section 28 of the State Property Act 1954 (the Act) provides that property held by a company at the time of its dissolution becomes state property, in the name of the Minister for Public Expenditure; National Plan Delivery and Reform (the Minister), unless it was held on trust for another. The OPW deals with legal/ownership issues arising on real property (land / buildings) that devolves to the Minister under the Act. This provision mainly exists to ensure that land is not ownerless. The OPW, or the Minister, does not occupy or take control of what is a large volume of property that falls under this heading.

The OPW cannot conclusively establish if property which was registered to the company referred to has vested in the Minister. The company has been dissolved since 19th October 2007 and can be restored to the Companies Register up to 20 years after that date. If restored any property it held will revert to the company as if it had never been dissolved. Any interest that may currently be held by the Minister is defeasible by restoration.

The Minister has limited powers under the Act but he can, under Section 31, waive any interest he has to another if appropriate in all of the circumstances. The Minister has in the past waived his interest in properties to Local Authorities and the OPW, on behalf of the Minister, is always willing to engage with any Local Authority to try to resolve issues arising with property of dissolved companies.

In other words, after insolvency and dissolution, the State, despite having ownership of the property which could possibly be salvaged so that someone could make a decent go of it, is not letting it go until after 20 years. We have to wait 20 years before we can do anything and even then, we probably will not bother. Wexford County Council has effectively shown no interest in this property despite the council having spent a deal of money trying to secure it against the perils it comes up against from the youngsters who are invading it. This is simply crazy. How many more of these dissolved and insolvent properties are lying around the country in the ownership of the Minister for public expenditure? We have effectively allowed them to become dangerous derelict sites and eyesores for want of legislation for the common good.

We have no difficulty in supporting the motion before us but let us get our house in order when it comes to insolvent company lands and property in State ownership.

Deputy Gary Gannon

I appreciate the opportunity to speak on the motion on Ireland's opt-in to the EU's amending regulation on insolvency proceedings. This might appear to be a technical matter and just another adjustment to European legal frameworks, but to those of us who believe the law should first and foremost serve people, it is anything but abstract. Insolvency law, at its core, governs what happens when things fall apart, a business collapses, debts cannot be paid and livelihood is on the line. This is the system we rely on to provide order, fairness and, hopefully, justice.

While I recognise and agree with the intention of the motion to streamline cross-border insolvency, prevent jurisdiction shopping and protect creditors, where necessary, we should also consider who it actually benefits and who might be overlooked. In this country, we have seen how financial systems can bend under pressure. We have been destroyed by it. We have seen individuals use foreign jurisdictions to resolve debts under more favourable conditions, something that is not available to most people struggling under the same weight. It is one thing to reform insolvency laws to facilitate smoother procedures across Europe but it is another ensure that reform benefits everyone equally. Let us not pretend that access to cross-border insolvency protections is evenly distributed. Those with knowledge, means and connections are far more likely to benefit than a small business owner or family who have fallen behind on their mortgage payments.

If we are to support the opt-in, as the Labour Party will in this case, it must be done with full awareness of the gaps in access and fairness that persist. We should not allow this to become a tool used more effectively by the wealthy than it can by the vulnerable.

I also caution that insolvency laws must never become a convenient mechanism to dissolve responsibility, be it financial, ethical or social. When creditors are protected workers must be protected too. When insolvency allows debts to be cleared safeguards must be in place to ensure it is not done at the expense of wages and pensions or with disruption to communities.

While Ireland is aligning our framework with Europe, we should take the opportunity to ask whether our domestic insolvency system is fit for purpose. Is it humane and accessible and does it provide a real path forward for ordinary people, not just corporations or those who can afford teams of advisers? This moment is an opportunity to reflect on what insolvency proceedings should look like in a republic that claims to value dignity, justice and equality. If we support this motion, let it be part of a broader commitment, one in which reform does not stop at compliance but goes further into fairness.

I support closer European co-operation but not at the cost of turning away from the lived experience of those in financial distress at home. Let us make sure that this is not just a bureaucratic tick-box exercise but a step towards a system that works for all, not just for those who know how to work it.

Deputy Richard O'Donoghue

I will not oppose this amending regulation. It ensures the importance of the establishment of civil justice between European states.

With regard to insolvency in this country, we have to look at how many businesses were forced into insolvency as a result of inflation or Revenue interest and penalties? We are talking about small businesses as well as large businesses. How many companies entered insolvency once, twice, three times, four times or five times and reopened each time under another name? How many had a sister company into which they moved the assets before going through insolvency and starting all over again? Protections need to be put in place to ensure the directorships of such companies leave a trail across showing the same people in the same companies coming back. We need to make sure regulation in is place to deal with that.

Small businesses going into insolvency as a result of Revenue interest and penalties should be looked at to see if they can be saved. Small businesses have inflation costs, employment costs and running costs. They will not have ways and means of getting funding from their banks to keep them going because the banks look at them as only small entities or as non-viable. These small businesses are very important to their communities, however.

I will not oppose the motion. This amendment is needed to make sure that insolvency is updated for all the European Union member states. We need to have provisions in place at home to deal with rogue operators that go into insolvency two or three times or more.

Deputy Paul Nicholas Gogarty

I am grateful for a few minutes to speak on this very technical but necessary rubber-stamping of amendments to Regulation (EU) 2015/848 to modify its Annexes A and B, following the changes in seven EU member states, as the Minister outlined. It will ensure that the regulation continues to facilitate effective civil and judicial co-operation at EU level.

The Minister mentioned that we must do this within three months and this was issued in February. It is important and technical. In July 2022, Slovakia notified the Commission of recent changes to its domestic insolvency law introducing a new preventative restructuring procedure as well as a new type of insolvency practitioner. This was followed, as the Minister outlined, by notifications from Spain, Estonia, Malta and Italy in 2022, Belgium in July 2023 and Luxembourg in January 2024. The Commission went through all these notifications to ensure compliance and this is where the regulation needs to be amended. Essentially, if the Dáil approves the motion, it means we can apply the amended recast European insolvency regulation, ensuring that Ireland's insolvency laws align with the updated scope of the European framework.

The amendments make no substantive changes to the regulation but the efficient treatment of cross-border insolvency and of debtors with their centre of main interest in an EU member state requires regulation to reflect domestic insolvency laws. The proposal allows this regulation to be continued. As the Minister stated, it adjusts the legal framework of the member states on insolvency by the time of its application. This is why it is a three-month process. It is a rubber stamp and I support it.

Minister of State at the Department of Justice (Deputy Niall Collins)

I thank Deputies for their contributions to this important debate. We have listened carefully to what has been said today, and we can all agree on the importance of this opt-in.

In summary, this proposal was presented by the European Commission to the Council on 14 February 2025. It is for an amending regulation that will update and replace Annexes A and B of recast Regulation 2015/848. These annexes are decisive in defining the scope of the application of Regulation 2015/848 of the European Parliament and of the Council of 20 May 2015 on insolvency proceedings. They set out definitive lists of the different types of national insolvency proceedings and national insolvency practitioners in each member state that are to be recognised by other member states for the purposes of the regulation. It is important therefore that these annexes are regularly updated in order to reflect the actual legal situation in the member states.

The specific changes made by the new amending regulation are designed to replace Annexe A and Annexe B of the 2015 regulation with updated versions to take account of new types of insolvency proceedings and insolvency practitioners arising from changes in national insolvency law in seven member states. These member states are Slovakia, Estonia, Spain, Malta, Italy, Belgium and Luxembourg. The European Commission has analysed the notifications of the said member states in order to ensure compliance of the notifications with the requirements of the regulation. It is important for me to emphasise that this amending regulation does not make any change to the lists of Irish insolvency proceedings and Irish insolvency practitioners in Annexes A and B that are to be recognised and enforced by other EU member states under the recast insolvency regulation.

As already stated, it is desirable that Ireland should opt into this proposal for several reasons. The recast insolvency regulation is an important and well-established part of civil justice co-operation between EU member states and ensures a more coherent and predictable approach in cross-border insolvency cases, and avoids unnecessary legal uncertainty and added litigation costs. The amending regulation is a very useful updating measure to ensure the effective and efficient operation of the recast insolvency regulation across EU member states. As Deputies will appreciate, it is desirable for Ireland to apply the same updated rules as other member states. As a result, what we are asking the House to do today is to approve the exercise by the State of the opt-in or direction under Protocol 21 to take part in the adoption and application of the proposal for a regulation of the European Parliament and of the Council amending Regulation 2015/848 on insolvency proceedings to replace its Annexes A and B. It is important to reiterate that the current proposal merely modifies these annexes to accurately reflect the content of national notifications and adopt the annexes containing the lists of national procedures or types of insolvency practitioners respectively in this field. These changes do not affect any of the obligations and rules set out in the regulation.

The relevant three-month period to opt into this proposal will expire on 13 May 2025. It is desirable that Ireland should exercise its right to opt into this amending regulation. Therefore, I ask the House to approve the opt-in in this amendment to the proposed regulation.

Question put and declared carried.