I move amendment No. 3:
In page 60, between lines 21 and 22, to insert the following:
“Amendment of section 599 of Principal Act
92. Section 599 of the Principal Act is amended by the substitution of the following for subsection (4)(c)—
“(c) whether an action of the related company or of any subsidiary of the related company caused the liquidation;
(d) whether the directors of the company acted at all times in their capacity as such or as directors or employees of a related company;
(e) whether the directors of the company distinguished at all times between the best interests of the company and those of any related company;
(f) whether the related company’s prior conduct led creditors to believe that it stood behind the company;
(g) the intermingled nature of the business carried on by the companies;
(h) where a group structure enabled a company with assets insufficient to meet its liabilities to trade while using assets belonging to a related company, whether the structure was calculated unfairly to defeat the interests of creditors in a winding up or to impose any liabilities on the Exchequer or other public funds;
(i) the effect which such order would be likely to have on the creditors of the related company concerned.”.”.
The amendment is designed to stop or at least prevent a repeat of the asset stripping that we saw at the Clerys company on O'Connell Street where hundreds of people lost their jobs in a property play. I am sure the Minister will agree that the people of Ireland were scandalised at what happened, and that such a thing could be allowed to happen, in a situation where the profit motive triumphed over every other consideration. Using common enough grip company structures, the valuable aspect of the Clerys business, the building itself, was held in a subsidiary company called OCS Properties while the trading section was held in an outfit called OCS Operations, which is the trading arm that ran the department store.
As the Minister will know, Clerys was sold to a company called Natrium on 11 June 2015 and the trading section was sold for €1. Lo and behold, at the stroke of a pen, the company was wound up with minimal notice. This meant, in plain terms, that there was nothing whatsoever in the coffers of the trading company to pay redundancies and to ensure that concession holders who were left on the hook for thousands of euro received what they were owed.
As the Minister will be aware, section 599 of the Companies Act allows for a liquidator or creditor to bolster the assets of a company being wound up and for it to apply to the court for an order directing that a related company, and in this case it was the property company that held a valuable asset, to contribute to the debt. Since the introduction of the section in the Companies Act 1990 by one of the Minister's predecessors, Desmond O'Malley, the provision has not been used or tested in the courts. In the meantime, companies like Natrium and its directors have laughed all of the way to the bank and the taxpayers of Ireland, including me, the Minister, everybody in here and citizens across the country, are squeezed for the redundancy money. This fact was pointed out in a report to Cabinet almost two years ago on the sale and liquidation of Clerys. I am sure that the Minister has had an opportunity to, if not read the detailed report, be briefed on same. We do not know when the next Clerys-type episode will happen. What we can say with some clarity is that the current set of laws, in the absence of testing, are not robust enough to prevent a Clerys-type situation from happening today or tomorrow.
Amendment No. 3 proposes to amend section 599 in the context of today's Bill, which is timely and necessary. Fundamentally, if the amendment is accepted, it would remove the profit motive and make anyone considering undertaking a Clerys-style stunt to think again and to reconsider their actions because all of their assets would clearly come into play. Again, this approach was outlined in a report that I drafted and brought before Cabinet in July 2015.
Limited liability cannot be abused or exploited and company directors have obligations to all of their companies and staff. Carrying out business of an intermingled nature and within a group structure should never be used to exploit people in any way. The seven criteria that I have listed in the amendment, if adopted by the House, will send a strong message that we do not encourage, in this country, a business culture where people who are caught up in the wreckage of corporate power plays are treated like collateral damage. The message will go out that we encourage responsible corporate behaviour, that we do not view it as a luxury, that through our laws we encourage and promote responsible corporate behaviour, and that we do not preside over a wild west-type business culture where people like the Clerys workers, the small business holders and the concession holders in Clerys were left on the hook. I appeal to Senators, specifically my colleagues in Fianna Fáil, to support this provision that will have a transformational effect on the conduct of business in this country. I clearly recall that when the Clerys scandal first broke our colleagues in Fianna Fáil were, quite rightly, outraged and they called for laws to be changed and initiatives taken to ensure that something like this did not happen again. Today they have an opportunity to support a change of the law that will ensure episodes like Clerys are prevented from happening or at least the risk of something like it happening again is minimised.
