This section gives us an opportunity to say a few general words about the fears we might have about whether this Part of the Bill will work. Schemes such as this have been included in the British Insolvency Act. My information is that it is not working in Britain, that it is too expensive and, because there is such a heavy recourse to court hearings to settle matters, it is impractical legislation. Reference is made by advocates, of whom I am one, of legislation of this kind to the United States Chapter 11 provisions. We attempt in Chapter 9 of our Bill to copy their Chapter 11.
It is worth recalling that Chapter 11 in the United States is only used for very large companies, where very large sums of money are involved and where the court and administrative costs are small in proportion to what is at stake. The United States Chapter 11 provisions have not been used successfully for companies of the size we in Ireland would be concerned about in this discussion. The reasons, as I am advised, involve far too much recourse to the courts and, as we know, even the simplest High Court hearing costs £2,000 to £3,000. Also, my understanding is that it presumes restraint on the part of creditors in seeking to have their money returned, that they will stand back and allow the court to protect the company. My impression is that certainly companies who enjoy preferential status will not be prepared to do this. They will not co-operate in the necessary compromises because they know they have security that others do not have.
This section of the Bill has been touted by the Minister for Finance as a supposed replacement for Fóir Teoranta. We were told when the decision was announced to abolish Fóir Teoranta, the State rescue agency, that all the problems that it was taking care of will now be taken care of by Chapter IX of the Companies Bill. This is just not true. This section will not provide any substitute for the availability of easy or soft money that was made available under the Fóir Teoranta legislation, and which preserved many jobs throughout Ireland. It is no replacement for Fóir Teoranta and it should not have been claimed to be.
I should say, there has been no Second Stage discussion anywhere on this Part of the Bill. This Part of the Bill was not in the original Bill. It was introduced as amendments in the Seanad. It may have been discussed on Second Stage in the Dáil, but there has been no detailed scrutiny until now of this provision. It was not scrutinised in the Seanad. We need to examine it rather closely to see if it is going to work.
