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Baroness Buscombe: My Lords, I thank the Minister for his response. There was certainly no suggestion on our part of a hidden agenda. We are seeking clarification. It has been our understanding from the outset that an authorised person would not be able to carry out other insolvency procedures. I do not refer to giving advice. We believe that anyone can advise. We have never strayed from that point. Advice can be given by any professional at any stage. However, in terms of acting, we are seeking confirmation, given the Minister's response, that an authorised person will be
able to recommend some other insolvency procedure, or will be likely to recommend it where it makes sense, such as bankruptcy, administration or liquidation. They will be able to act in those procedures. If that is the case, we shall be content. Our concern has been that the new animal--the authorised person--will be able to act only in cases where there is a voluntary arrangement but will not be able to act where it would make sense, say, to recommend instead bankruptcy, administration or liquidation. The authorised person would not be able to be involved in those processes as supervisor.
Lord McIntosh of Haringey: My Lords, if anything, the boot is on the other foot. The present situation is that all kinds of people may advise a company in difficulties. There have been accusations--they have been made known to the Insolvency Service--that if insolvency practitioners provide the advice as authorised persons, they are more likely to recommend insolvency procedures where they can make money. What is sauce for the goose is sauce for the gander. It is the responsibility of those companies that are in difficulties to seek objective advice. They must take into account the possibility that those who are advising them might receive fees through one course of action rather than through another course of action. I am sure that they will.
It is rather similar to the position of those making investments. It is the responsibility of those making investments to be informed about--that, in turn, is government's responsibility--the reasons why investment advisers might give particular advice rather than other advice. If that reason is that the commission is better, someone ought to know about it. But I do not think that the Bill introduces anything new that might give rise to the danger feared by the noble Baroness, Lady Buscombe.
Baroness Buscombe: My Lords, I thank the Minister, but I should tell him that we have considered this point carefully. Having read through the debates held in Grand Committee, where we felt that we perceived this matter in a different light was on the question of advice as opposed to action. We hold to the view that anyone can offer advice, but that people are less likely to suggest a certain course of action if they personally will not be able to be involved in that course of action and thus subsequently be paid. That is the point which I am trying to emphasise. I may not have stressed it clearly enough in Grand Committee.
We are concerned that the proposed "authorised persons" will choose a course of action with which they can then become actively involved and therefore receive payment. If the Minister is now reassuring me that those persons will be able to act in ways other than in a voluntary arrangement--namely, they will be able to act as the supervisor in a bankruptcy, or in administration or liquidation, in which case they would be paid for the job they undertake--then I am satisfied.
Lord McIntosh of Haringey: My Lords, with the leave of the House, I am saying something much
simpler here. I simply wish to state that the Bill does not seek to regulate the provision of advice. That applies whether or not the "authorised persons" are insolvency practitioners.
Baroness Buscombe: My Lords, I thank the Minister for that explanation. However, the principal point that I wish to make concerns the services people are able and qualified to offer as "authorised persons" rather than advice. If they can offer services, they can then charge a fee for supervising a particular course of action. It is on that point where differences lie between us.
In any event, I shall read with care what the Minister has said and, on that basis, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
7 p.m.
Schedule 1 [Moratorium where directors propose voluntary arrangement]:
Lord Kingsland moved Amendment No 3:
- Page 12, line 16, after ("arrangement") insert ("(with or without modifications)").
The noble Lord said: My Lords, the noble Lord has already conceded that the Bill makes provision for the nominee to consider the proposed voluntary arrangement as amended by any modification notified to him by the directors. However, the noble Lord rejected proposals to notify amendments from other sources because of the unreasonable burden which would be placed on nominees to take into account other modifications.
Therefore, the position is that a nominee, in considering a proposed voluntary arrangement, can take into account any modification noted to him by the directors. However, he cannot take into account any other modifications. Accordingly, if the nominee finds the proposed voluntary arrangement acceptable, except in one or two minor respects, he must nevertheless reject it, even if he is convinced that one of the creditors will propose a modification which will subsequently be acceptable to and capable of approval by the meetings of members and creditors. In those circumstances, even though the nominee is entirely satisfied that the proposed voluntary arrangement has a reasonable prospect of being approved and implemented if a minor modification is considered by the members and creditors, a moratorium will still never come into existence.
In Committee, the Minister said that the directors might never be prepared to agree to further modifications, in which case the meetings would be unlikely to approve and implement the voluntary arrangement. However, it does not follow at all that, merely because the directors might not agree to further modifications, the meetings would be unlikely to approve and implement the voluntary arrangement. It is the meetings themselves which would propose the
modifications. If they proposed them, they would be likely to approve and implement the voluntary arrangement as modified. I beg to move.
Lord McIntosh of Haringey: My Lords, I hope very much that we are not talking at cross-purposes here. As I said during our debates in Committee, we consider that nominees should look at the proposed individual or proposed company voluntary arrangement as he understands it will be put to the creditors and, if applicable, to the shareholders. As drafted, the Bill already makes provision for the nominee to consider the proposal as amended by any modification notified to him by the directors. We would not want him to consider it as it might conceivably be modified, either in his own mind or on the basis of one or more--possibly conflicting--proposed modifications by creditors.
As I understand them, the amendments could mean that we would encounter a situation where the nominee has to speculate on all conceivable permutations of possible modifications (proposed or not) and decide whether a voluntary arrangement is likely to be approved and implemented on the basis of those possibilities. The noble Lord, Lord Kingsland, suggested the position where a nominee might think that the proposed moratorium would have a reasonable chance of success--I am not using quite the right words in terms of the Bill. However, unless the directors were prepared to agree the modifications, they would not put them to the meeting and the moratorium would not come into being. In that case, the voluntary arrangement is unlikely to be approved and implemented.
We would not want the company to be able to obtain a moratorium, or for it to continue. In such circumstances it would be entirely inappropriate because no approved voluntary arrangement would be likely to ensue. The amendments would also place an unreasonable burden on the nominees. They should not be obliged to make decisions on the basis of conjecture. Nominees need certainty in these circumstances and that can be provided only if they are required to consider the proposal as the directors intend it to be put to the meetings.
We therefore consider it essential that the nominee is required to form a view only in relation to the voluntary arrangement proposal at the various points in time that he is actually considering it for one or other of the various purposes he is required so to do under the Bill, such as considering whether the proposed arrangement has a reasonable prospect of being approved and implemented prior to the directors obtaining a moratorium, or for the purposes of monitoring and considering whether he should withdraw his consent to act during the moratorium.
I should also say that the nominee would have to withdraw his consent to act if it became apparent to him that valid concerns about the proposal were being raised by creditors which the directors were not prepared to accommodate by way of modifications to their proposal and it appeared to him, in the light of
those concerns, that the proposal no longer had a reasonable prospect of being approved or implemented.
As I said earlier, I hope that we are not talking at cross-purposes and that I have not completely misunderstood what the noble Lord, Lord Kingsland, has been saying. However, I think it is important to stress that the nominee should be required to consider only realistic proposals.
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