| Previous Section | Index | Home Page |
5.30 pm
Mr. Waterson: Does the hon. Gentleman at least accept my concern that, in other parts of the Bill, the actual period for investigation and then discharge of a bankrupt could be much less even than 12 months? Given existing pressure on the relevant resources, that could mean that if the information that a property was not the sole, but could be the principal, residence, was not volunteered, that asset might not be available at all for the satisfaction of the creditors due to the dishonesty of the bankrupt and the lack of proper investigation by the trustee.
Mr. McWalter: I thank the hon. Gentleman for that intervention. Where there is non-disclosure, the person is automatically in danger of instantly being labelled a malign bankrupt; because of the failure to disclose, the kind of protection for the principal home envisaged in the new clause would not apply. Such behaviour would thus immediately constitute a prima facie case for the person not benefiting from the provision.
Mr. Waterson: The hon. Gentleman is generous in giving way to me again. The point I was trying to make was that the non-disclosure might remain undiscovered—although the hon. Gentleman is right about the effects, if it was discovered.
Mr. McWalter: I accept what the hon. Gentleman says, although if it became clear at a later stage that
someone had failed to disclose, other statutes might be applicable, depending on the precise nature of the non-disclosure; for instance, the Proceeds of Crime Bill might apply.
Mr. Ken Purchase (Wolverhampton, North-East): Although I have huge sympathy with the new clause in its widest sense because it will bring a little more justice in those situations, on the narrow point that my hon. Friend makes about malignity and non-malignity, does he agree that determining between the two would be an enormous task to give anyone? Within that narrow context, does he agree that a person who fails to keep themselves fully and properly informed of good business practice might as well be acting malignly if it leads to the difficulties that we are discussing?
Mr. McWalter: As always, my hon. Friend makes a substantive point: someone might fail to co-operate in disclosing their difficulties meeting their obligations because they simply do not know that to do so could result in those difficulties being obviated. That raises interesting questions about the custodians of that process, although insolvency practitioners increasingly seek such changes in the law. When a person makes an initial approach to such a practitioner, they will rapidly be made aware of the arrangements whereby they could be assisted to discharge their obligations to their creditors.
To return to the point that I was making, the procedure admits of coping with two very different kinds of case, and even with the slightly in-between grey cases on which Opposition Members are especially keen. The result of the change—for which I have already commended my hon. Friend the Under-Secretary of State for Trade and Industry—would be that people could think about setting up a business without its threatening the welfare of their family. That would be a marvellous change for the business culture of this country and I sincerely hope that we can make the provision work.
I accept the point made by my hon. Friend the Member for Wolverhampton, North-East (Mr. Purchase) that its implementation will require extremely good communication between the Government and business, hopefully, for instance, through the agency of the Small Business Service. We should try to ensure that it becomes a prime agency for helping businesses that experience the sort of difficulties to which he adverted.
Mr. Carmichael: I shall not detain the House long. I have already given hon. Members the benefit of the Presbyterian perspective and stigma in Committee, and I do not intend to rehearse it again. However, as the hon. Member for Cities of London and Westminster (Mr. Field) has said, this is a question of shades of grey, and even in the Church of Scotland, we recognise shades of grey.
Mr. Purchase: Does the hon. Gentleman speak for the Wee Frees?
Mr. Carmichael: I cannot speak for the Wee Frees; I am not one of them.
The hon. Member for Eastbourne (Mr. Waterson) said that he was aware of difficulties in other jurisdictions, including Scotland. I am not, in all honesty, aware of a great groundswell of opinion among insolvency
practitioners or others in Scotland seeking the sort of changes that he seeks to promote. Unless he can supply us with more concrete examples, I wonder about the extent to which he perhaps seeks to manufacture a problem that does not exist.I had some difficulty in reconciling the hon. Gentleman's remarks and, indeed, those of his colleague, the hon. Member for Cities of London and Westminster, with those made by those on the Government Benches. When all else fails on these occasions, my approach is always to read the amendment, and it seems to me that the new clause was being painted rather blacker than necessary.
The hon. Member for Cities of London and Westminster says that the application should be a matter of fact, rather than of law. Indeed, if one has regard to the terms of the new clause, that is, in fact, the case. We are dealing with a number of instances in which discretion will be given to trustees, and we hope that that discretion will be excised responsibly and properly on the basis of the information available to them at any given time. Indeed, in the circumstances, I would go so far as to say that the trustees will be best qualified to judge the appropriate application.
Discretion is the important aspect. As the hon. Member for Hemel Hempstead (Mr. McWalter) said, where someone seeks to avoid disclosure, it is highly likely that the trustee will regard that as an act that would divest the individuals concerned of the protection provided under new clause 6. In other words, they would not be protected by it. On balance, the Government's approach is correct.
I have only one concern, which has not yet been properly aired: low-value homes. I want to hear more from the Minister about how those proposals will work and how the variation in property prices will be accommodated. In certain parts of my constituency, two or three-bedroom cottages can still be bought for £10,000 or £15,000.
Mr. Purchase: Are they in a nice part of the hon. Gentleman's constituency?
Mr. Carmichael: The hon. Gentleman should be aware that there are no nasty parts of Shetland. If he has learned nothing else in past eight weeks, I have surely taught him that much.
The situation in Shetland is very different from that which pertains in other parts of the country, and I wonder just how that circle will be squared. I would want to hear rather greater assurance from the Government that those concerns have been met before we rush headlong into the difficulties that I have outlined.
Miss Melanie Johnson: On a few occasions, I wonder whether all hon. Members have listened carefully to what is said in the opening remarks. I thought that I had sketched out very clearly the fact that there are two situations. I refer in particular to the comments made by the hon. Member for Eastbourne (Mr. Waterson) in his opening remarks. The new clause is intended to deal with uncertainty and variation and to achieve a balance. I thought that I had emphasised those points in my opening remarks, but I obviously failed in several regards and I shall endeavour to set the record straight.
First, let us be absolutely clear that the new clause does not exclude the family home in any sense. Were there to be a failure to disclose the existence of a family home, it would be an offence under the Insolvency Act 1986, and it would be taken into consideration by the courts. If there is equity in the property, the creditors will get the benefit of it. The effect of the new clause is that the trustee must act within three years. That is the core and central purpose of the new clause, albeit, as Members have recognised, a lengthy and complicated way of achieving it. It responds to a significant number of views that were expressed. Again, the hon. Member for Eastbourne questioned the views of the insolvency profession.
Mr. Borrow: I am sure that my hon. Friend has received a great many representations on this matter. Is she in the same position as me, however, in that the only hostile representation that I have received was from the anonymous insolvency practitioner? Does she regard anonymous representations as I do, and give very little weight to them?
Miss Johnson: Indeed. I have not seen the anonymous representation, as I suspect that it is hard to answer such an anonymous representation. It has not come to my attention, although the hon. Member for Eastbourne has raised it in his remarks.
I should like to set the record straight. On the issue of the matrimonial home, the Insolvency Practices Council said:
- "It is accepted there are many different circumstances affecting the value of the equity and the potential value to the bankruptcy estate. When should a decision be taken on realisation? At present some of the variations do not seem to be soundly based."
- "We continue to hear from people who were bankrupt some years ago and who have not taken steps to secure their home from any action by their Official Receiver/Trustee in Bankruptcy. Now years later, they find that the property has increased in value and their regular mortgage repayments have reduced the borrowing, putting substantial equity in the property for the Official Receiver/Trustee to claim".
The Association of Business Recovery Professionals also commented:
- "This is the concern, which has been identified . . . about variations in practice between trustees in bankruptcy in how they deal with the matrimonial home, and a perceived unfairness in selling the home many years after the bankrupt's discharge."
| Next Section
| Index | Home Page |