Previous Section | Back to Table of Contents | Lords Hansard Home Page |
Lord Sharman: I endorse what the noble Lord, Lord Hunt, has said. In practical cases of administration and insolvency, it is sometimes difficult to obtain consent as envisaged in this part of the Bill. I believe that the proposed amendment is an eminently sensible way of enabling the administration to proceed with speed, which is what we are seeking to do in the Bill, and I commend it to the Committee.
Lord McIntosh of Haringey: We certainly have reflected on the issue and the noble Lord, Lord Hunt, is right in saying that it was raised in the Commons. We return to what I was saying earlier about creditors' meetings. The consent of creditors does not have to be achieved by a physical meeting. The Bill provides that 50 per cent in value of unsecured creditors who have responded to the request will have to consent to the extension of the administration. That 50 per cent could be reached by voting by correspondence or by voting at a creditors' meeting. I hope that what I said previously about the desirability of voting by correspondence will allay some of the fears that have been expressed.
Lord Hunt of Wirral: I am grateful to the noble Lord, Lord Sharman, for his support. Both he and I want to reflect further because we are a little disappointed in the Minister's response. Perhaps this is a matter to which we shall want to return at a later stage, but in the meantime I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 327 to 329D not moved.]
Lord Hunt of Wirral moved Amendment No. 330:
The noble Lord said: With the words I seek to add, sub-paragraph (4) would then read:
Lord Sharman: Once again I rise to support the amendment, which appears eminently sensible; that is, those who have to take action as a result of the notice of cessation should be in receipt of a notice.
Lord McIntosh of Haringey: Certainly it is desirable that the administrator should notify his or her appointer and the company itself if the administration ceases because its purpose has been achieved. As a general point, the persons to be given notice of various matters in administration will be dealt with in the new insolvency rules. Those rules will be required to accompany the revised administration procedure. We do not think that this is a matter which needs to be set out on the face of the Bill. We shall consult with interested parties on the revisions to the insolvency rules.
The noble Lord, Lord Hunt, was good enough to challenge me by asking whether we can do any more, without prejudice to the consultation, in the direction of transparency as regards the insolvency rules before we reach Report stage. I did not respond to that because he did not ask me to, but I shall respond now by saying that I will see what I can do.
Lord Hunt of Wirral: That is a very welcome response at this late hour. I warmly applaud the Minister for agreeing to consider this further. It would greatly reassure those who have expressed concerns about a number of provisions in the Bill if it could be shown that the matters in question are being dealt with properly and in accordance with revisions to the rules.
In those circumstances, I hope that it will be possible to see the draft during the course of the Recess so that, if necessary, we can return to the point at a later stage. In the meantime, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Hunt of Wirral moved Amendment No. 331:
The noble Lord said: Amendment No. 331 would insert on page 278 a new sub-paragraph (5) to be worded as follows:
Lord McIntosh of Haringey: I hope that I shall be able to persuade the noble Lord, Lord Hunt, that we have covered this point. The Minister in another place pointed out that the provisions allowing an office holder to apply to the courts for directions in these circumstances already exist in the Insolvency Act 1986 or are provided for in Schedule 16 to the Bill.
For example, Section 168(3) of the 1986 Act gives a broad power to a liquidator, which includes a provisional liquidator, to go to court for directions in relation to a particular matter arising in the course of a winding up, and paragraph 16 of this schedule enables the administrator to apply to the court for directions regarding his functions. I believe that those two provisions cover the points made by the noble Lord.
Lord Hunt of Wirral: I am grateful to the Minister for that explanation. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 331A to 331C not moved.]
Lord Hunt of Wirral moved Amendment No. 332:
The noble Lord said: Where paragraph 97(3) presently reads
Lord McIntosh of Haringey: Paragraph 97 of Schedule 16 concerns the replacement of administrators who are appointed by the company or its directors under the out-of-court route where there are no floating charge holders to veto the appointment. The amendment would restrict the creditors' opportunity to replace an administrator appointed in this way to the period up to and including the initial creditors' meeting.
We expect that the occasions on which creditors will want to replace the administrator will be rare, but if it is restricted to only that period leading up to and including the initial creditors' meeting, they would have little opportunity to assess the administrator in his or her performance. It is likely that the first opportunity for creditors to interact with the appointed administrator will be at the initial creditors'
Lord Hunt of Wirral: I am grateful to the Minister for that explanation. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 333 to 336 not moved.]
The Deputy Chairman of Committees (Lord Geddes): I should advise the Committee that Amendment No. 337 has been misplaced. It will be called after Clause 246 stand part.
Clause 245 [Special administration regimes]:
Lord Borrie moved Amendment No. 338:
The noble Lord said: In moving Amendment No. 338, I shall speak also to the following amendments up to and including Amendment No. 346, which stand in my name and the names of my noble friends Lord Currie of Marylebone and Lord Peston. I apologise profoundlyespecially at this hourfor the length of the amendments. Fortunately, it will take me less time to explain their purpose than it would to read them out.
In legislation for both the railways and the water industry, governments have promoted legislation to cover the unfortunate situation where a network goes into insolvency, it is no longer possible to operate the network and there is then a public safety risk. Existing legislation in those fields enables the appointment of a special administrator who can keep the network operational.
Prior to the Utilities Act 2000, the present Government's White Paper proposed that the Act should contain similar provisions for the appointment of a special administrator in the case of a network failure in the gas or electricity industries. In their White Paper, the Government said that the chances of a major regulated energy network business getting into serious financial difficulties was small, but the document went on to say:
The risk of insolvency is probably more than the Government admitted, because companies holding network licences may be involved in other, more risky, ventures and have highly-leveraged financial
I declare an interest as a former member of Ofgem's management board. If my noble friend Lord Currie of Marylebone, in whose name these amendments also stand, were here, he would do the same. The amendments draw heavily on equivalent provisions in the Water Industry Act 1991 and the Railways Act 1993. They are meant to provide that the Government and Ofgem can act to ensure that gas and electricity continues to flow to end-users in the event of the insolvency, or potential insolvency, of a network business; and to avoid the nightmare scenario of, for example, air entering pipes when gas pressure drops thus creating a potential explosive mix of gas and air.
Under these amendments the Secretary of State, or the regulating authority, may petition the court for a special administrator. He would be charged with making a scheme for the transfer of the licensee's assets and undertaking to a new licensee appointed by the Secretary of State, or the authority, and, in the mean time, with ensuring that the licensee continues to trade. Amendment No. 343 would enable the Secretary of State to make available funds to enable the licensee to continue to trade.
Since I raised the matter on Second Reading at the beginning of the month, my noble friend Lord McIntosh of Haringey kindly wrote to me expressing broad sympathy with what these amendments seek to achieve. He also expressed the need for consultation, as well as an examination of the implications and consequences for all concerned. Now, as we go into the Summer Recess tomorrow, it is clear that there is a considerable gap between the Committee stage and the Report stage of this Bill. Therefore, I ask my noble friend the Minister whether he will consider that, by the Report stage, in, let us say, October of this year, there could be adequate time for consultation. In those circumstances, it would be most valuable if the Government could produce amendments of this kind in order to ensure the public safety objectives that I have outlined. I beg to move.
"(5) If the liquidator, provisional liquidator or administrator of a company becomes aware that this paragraph applies but that the court has not made an order under sub-paragraph (3) he shall apply to the court for directions."
"If the liquidator, provisional liquidator or administrator of a company becomes aware that this paragraph applies but that the court has not made an order under sub-paragraph (3) he shall apply to the court for directions".
I believe that the amendment is self-explanatory. It would simply allow for a liquidator, a provisional liquidator or an administrator to seek directions in the case of a public interest winding up. I beg to move.
Page 282, line 19, leave out "A creditors'" and insert "The initial creditors' meeting, or any creditors' meeting held before that"
"A creditors' meeting may act",
the amendment seeks to substitute the words
"The initial creditors' meeting, or any creditors' meeting held before that".
The amendment is self-explanatory and I look forward to the Minister's response. I beg to move.
Page 171, line 30, at end insert ", or
(f) an energy network company within the meaning of section (Meaning and effect of special administration order) of this Act (a company authorised to transmit or distribute electricity under section 6(1)(b) or (c) of the Electricity Act 1989 (c. 29) or as a gas transporter under section 7 of the Gas Act 1986 (c. 44)."
"However small the risk, electricity and gas are so important to life that it would be provident to have in place arrangements to deal with the consequences of such an occurrence".
Sadly, these government plans were abandoned, apparently for lack of parliamentary time, and, initially, the DTI appeared to support the idea that such provisions be inserted in to this Enterprise Bill.
Next Section
Back to Table of Contents
Lords Hansard Home Page