Independent TD Stephen Donnelly will submit a bill to the Oireachtas tomorrow aimed at cutting the average cost of examinership from more than €70,000 to €20,000.

Donnelly told The Irish Times he believed current examinership legislation to allow firms restructure their debts was unsuitable for small businesses.

“Last year banks put 360 businesses into receivership but only about 21 firms opted for examinership. Clearly the system is broken,” he said.

Donnelly said his proposed legislation would reduce the cost of examinership by allowing business owners and creditors to interact outside the courtroom first to try and agree a rescue deal, before going to court at the end to receive its approval for any rescue plan.

“There is an awful lot of businesses out there that are too small or can’t afford to go through a prolonged courtroom process as they currently have to,” Mr Donnelly said. “We badly need a quicker, less expensive process that still has court oversight.”

Lending conditions
The former management consultant said his proposal would give more powers to examiners by allowing them impose lending conditions on secured lenders and impose changes in leases in order to allow more SMEs to survive.

Creditors can still appeal to the courts if they feel they are being treated unfairly but in many cases this will not required, Mr Donnelly said.

“We need these changes in particular for foreign banks who are pulling their capital out of the market and are not concerned about firms surviving,” he said.

Ross Maguire, a barrister and a founder of debt relief campaigners New Beginnings, and Barry Lyons, a solicitor with Lyons Kenny, advised Mr Donnelly on his new proposals.