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Lord McIntosh of Haringey: They will indeed. The leading case is, of course, the case of Atlantic Computer Systems. Our difficulty with Amendment No. 310 is not that it clarifies the Atlantic Computers case; it would change the law. In other words, the law would come down on one side, whereas, as things stand, there is scope for such matters to be considered by the courts on a case-by-case basis.

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Amendments Nos. 311 and 312 are drafting points. The provisions as drafted work as is intended. The reference to "any additional money" in paragraph 72(3)(b) has the same meaning as,


    "any additional sum of money",

as proposed by the amendment. Similarly, it will be understood that the requirement referred to is one imposed by the court. Amendment No. 313 would require additional money to be paid to the owner of hire purchase goods, over and above their market value. The reasoning behind the requirement to pay the owner the market value of the goods is to enable him or her to replace them. If the owner believes that some value attaches to the goods as a result of their capacity to be hired, it is up to him to persuade the court that that should be reflected in its estimation of their market value.

Lord Mitchell: I am sorry that my noble friend the Minister does not agree with Amendment No. 310. Perhaps he would consider some of the points again. However, time is pressing, and we must get through the Bill. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 311 to 313 not moved.]

Lord Sharman moved Amendment No. 314:


    Page 274, line 28, at end insert "unless the court is satisfied that the administrator acted reasonably in all the circumstances"

The noble Lord said: The amendment deals with the issue of a challenge to the administrator's conduct. Paragraph 74 allows any creditor or member of a company to apply to the court on the grounds that the administrator's actions are prejudicial to their interests. In our judgment, there is scope for vexatious actions.

We also find it odd that, under that paragraph, the court can make an order, even if the action complained of was taken in reliance on a court order under paragraphs 71 or 72, which deal with the powers of the court to dispose of property. We would like to see a provision that, at least, allowed the court to decline to make an order, if it were satisfied that the action of the administrator was, in all the circumstances, reasonable. That is provided by paragraph 27(3) of Schedule A1 to the Insolvency Act 1986, which is incorporated into Schedule 1 to the Insolvency Act 2000. I beg to move.

Lord Kingsland: There is scope for vexatious conduct, and we support the amendment proposed by the noble Lord, Lord Sharman.

Lord McIntosh of Haringey: I agree with what the noble Lord, Lord Sharman, said, rather than with the amendment. I agree that, as long as an administrator acts reasonably, he or she should be free to conduct the administration in accordance with the provisions of the Bill. In revising the administration procedure, we

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have been keen to ensure that court resources are focused on where they are most necessary. In other words, we must avoid using them wherever we can.

It does not seem right to introduce, as the amendment would do, a further threshold beyond the need to establish the fact that harm had been caused and that that harm was unfair. The courts will examine closely the facts of any case, and they are used to taking decisions after weighing the different interests. Administrators who act using their commercial and professional judgment have nothing to fear from the provision. The amendment is unnecessary.

Lord Sharman: I am grateful to the Minister for his reply. I shall reflect on it over the recess. Meanwhile, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Hunt of Wirral moved Amendment No. 315:


    Page 275, line 31, leave out "discharged" and insert "released"

The noble Lord said: I want to probe why the Minister has moved away from the traditional wording and brought in a new verb. Under existing terminology it is the normal procedure for the administrator to seek "release" rather than "discharge". I am slightly confused as to why the terminology has been changed; no doubt the Minister will explain. I beg to move.

Lord McIntosh of Haringey: I am slightly puzzled, because I am advised otherwise. My understanding is that the term "discharged" reflects the language used in current legislation, which provides that when an administrator ceases to be the administrator, he has his release and the effect of the release is that he is discharged from any liability. They are slightly different things, with certain exceptions. However, I do not want to get into a semantic debate with the noble Lord, Lord Hunt. I had better write to him with examples of current legislation.

Lord Hunt of Wirral: I recognise that the Minister is a distinguished philologist. I am but a tautologist, and therefore I shall await his letter with great expectations. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 316 to 323 not moved.]

Lord Hunt of Wirral moved Amendment No. 324:


    Page 276, line 10, leave out paragraph (a) and insert—


"(a) secured creditors whose debts amount to 75% or more of the company's secured debts,"

The noble Lord said: In moving the amendment I shall speak also to Amendments Nos. 325, 328, 329, 335 and 336. Amendment No. 325 seeks to leave out "each secured creditor" and insert,


    "a majority in value of the secured creditors".

The amendments deal with the obtaining of consent by secured creditors. The Bill currently requires the consent of every secured creditor in these clauses, but I submit to the Minister that companies increasingly

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have a wide variety of secured creditors. I hope he will recognise that this batch of amendments seeks to implement a system where it may often not be timely or practical to obtain the consent of every one.

Amendments Nos. 328, 329, 335 and 336 are similar to the amendment moved, so I look forward to the Minister's response. I beg to move.

The Deputy Chairman of Committees: I should point out to the Committee that if this amendment is agreed to, I cannot call Amendment No. 325.

10.30 p.m.

Lord McIntosh of Haringey: I am afraid that this is another case in which there is potential for conflict of interest. There is probably no one single perfect solution for all circumstances. It may appear unfair that one secured creditor, whose debt may be relatively small, could frustrate an extension—it is, after all, about an extension of administration—supported by the majority of creditors.

It should be recognised that extending the administration, and with it the moratorium on action against the company, affects the rights of each secured creditor to enforce his proprietary rights. The amendment would effectively give the big secured creditors—for example, the bank—the power to override the wishes and interests of the smaller ones, whose only remedy would then be to apply to the court under paragraph 74.

If there is no consensus among the secured creditors, the administrator is always able to apply to the court for an extension of the time limit. It would be up to the court to weigh up the potential benefits of the extension against the needs of the secured creditors. However, a change of this kind, which could disenfranchise a minority of secured creditors, does not appear to be desirable.

Lord Hunt of Wirral: I would like to reflect on what the Minister has said. It is a difficult balance which undoubtedly he is seeking and I would like to think carefully about the points he has made. In those circumstances, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 325 not moved.]

Lord Hunt of Wirral moved Amendment No. 326:


    Page 276, line 11, leave out paragraph (b) and insert—


"(b) either—
(i) a meeting of creditors; or
(ii) creditors of the company whose debts amount to at least 50% of the total unsecured debts of the company (if any)"

The noble Lord said: The amendment would leave out paragraph (b), which states:


    "if the company has unsecured debts, creditors whose debts amount to more than 50% of the company's unsecured debts, disregarding debts of any creditor who does not respond to an invitation to give or withhold consent",

and would insert a new paragraph (b), stating,

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    "(b) either—


    (i) a meeting of creditors; or


    (ii) creditors of the company whose debts amount to at least


    50% of the total unsecured debts of the company (if any)".

The amendment would allow an administrator to obtain the required consent at a creditors' meeting where consent cannot be obtained from 50 per cent of all creditors by value because one or more large creditors are apathetic or cannot be contacted within the time-scale.

I hope that the Minister will have had an opportunity of reflecting on the amendment, which was moved in Committee in another place. The ministerial response was that the Government would want to reflect on the matter further and I hope that they have had the opportunity of doing so. I look forward to hearing the Minister's response, and I beg to move.


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