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Lord Sharman: My Lords, from these Benches, I, too, express my thanks and recognition of the extremely hard work that has been done on the time limits. We have moved forward a considerable distance in that regard and, by and large, I am content with where we are.
I have one comment to make on Amendment No. 206. Until the noble Lord, Lord Hunt, spoke, I was content with that amendment. My point follows the line of the questions raised by the noble Lord. I should appreciate confirmation from the Minister that the responsibility should be read in conjunction with paragraph 3 and that it is almost subsidiary to paragraph 3(2), which states:
- "The administrator must perform his functions . . . in the interests of the creditors of the company as a whole".
- "as quickly and efficiently as is reasonably practicable".
Lord McIntosh of Haringey: My Lords, I am grateful to both noble Lords for their general welcome to the amendments. If I sounded critical of Amendments Nos. 211 and 216, I am sorry; of course it is true that the consultation has taken time over the summer and that the amendments were tabled during a short period. If that means that the noble Lord, Lord
Hunt, is now content and that we have answered the points raised in Amendments Nos. 211 and 216, I am very happy.I do not believe that Amendment No. 206 imposes an impossibly high standard. I do not see it as saying that the administrator somehow has to be active 24 hours a day, seven days a week, in order to perform his functions quickly and efficiently. The relevant phrase is "as reasonably practicable" and we believe that the courts will take a practical line on construing the new duty. The duty of a given administrator is clearly to be interpreted in the light of what is reasonably practicable in the particular circumstances of a case. The same standards will not be not applied across all kinds and varieties of cases. We also believe that the courts are unlikely to entertain frivolous claims from applicants relating to trivial delay or delays that are unavoidable or cause no harm.
At the end of the day there is a potential for conflict in this regard. Yes, there are time limits and, yes, we have agreed to extend a number of them. We have also recognised that the process of administration may be more complicated than was allowed for in our original time scales. There are other people—those affected by the process of administration—who want it to be as quick as possible. That is why Amendment No. 206 is necessary. That is also why—this responds to the later remarks of the noble Lord, Lord Hunt, on time limits—we believe that there should be time limits. The present procedure has very few time limits. It has tended to make administration appear slow. A key point that came out of our consultation is that administration takes too long and provides no certainty for creditors about when they might get paid; we are also concerned with creditors in this regard. We must reassure the lending community that we are not relaxing any controls relating to the speed of administration.
Some of the critical views of the short time scales have been influenced by insolvency practitioners and those dealing with very large cases. I understand their interest. We believe that the time scales proposed in the amendment are adequate for dealing with many—if not most—cases without the need to go to court. We have taken soundings from those practitioners who specialise in smaller cases, who believe that the time scales will be more than adequate for cases at the smaller end of the market. That is why we want to add Amendment No. 206 to the Bill.
I am not sure whether I have offered any further details about the consultation process. We of course consulted insolvency practitioners. As I said when I moved the amendment, we talked to the CBI, the British Bankers' Association, the Finance and Leasing Association and representatives of business.
Lord Hunt of Wirral: My Lords, it would help if the Minister's office could let me have details of those bodies that attended so that I can check that all necessary people who have expressed their concerns to me were involved in the consultation process; I am sure
that they were. I do not want that information now but if I could have a list within 48 hours that would be helpful.
Lord McIntosh of Haringey: My Lords, I should be glad to do that as soon as I can and in advance of Third Reading next Monday. I believe that the general welcome justifies me in urging the House to agree to the amendment.
On Question, amendment agreed to.
Lord Hunt of Wirral moved Amendment No. 207:
- Page 261, line 23, after "appointed" insert "on a winding-up petition presented by a creditor"
The noble Lord said: My Lords, in moving this amendment, I shall speak also to Amendments Nos. 208 and 209.
I understand that Amendments Nos. 208 and 209 will be dealt with by the rules. We discussed the rules in Committee and there was a promise—I well understand why it has not been fulfilled—that I might have a copy of the rules sufficiently in advance to enable me to consult. Unfortunately, it arrived only comparatively recently. The noble Lord, Lord Sharman, and I have done our best to assimilate it. I might need a little longer to consult with those who raised relevant points with me. In those circumstances, I shall not seek at a later stage to press Amendments Nos. 208 and 209.
The purpose of Amendment No. 207 is to permit secured creditors whose loan is in default to proceed quickly and cheaply to appoint an administrator of their choosing. Where a provisional liquidator has been appointed on a creditor's winding-up petition, it is fair to require that the secured creditor should apply to the court for the appointment of an administrator who will, in effect, replace the provisional liquidator.
However, it is my contention that it would be wrong in principle to require that where the provisional liquidator is appointed on the company's own petition. It is acutely undesirable that the company should be given a further opportunity to compete with the secured creditor over the choice of the insolvency office-holder. In those circumstances, I beg to move.
5.30 p.m.
Lord McIntosh of Haringey: My Lords, I must confess to the noble Lord, Lord Hunt, that, after I said in Committee that I would do my best to get a copy of the first draft of the rules to noble Lords in good time, I was greeted with a storm of protest by officials. They said, "It's impossible to achieve this. We are nowhere near doing that and there are all sorts of consultations still in process. We cannot do it". To their immense credit, they have succeeded in getting something both to the Opposition Front Benches and to me in time for the debate this afternoon. However, I acknowledge, of course, that that is not in time for the draft to be fully studied and taken account of. If, as a result of studying the draft rules, amendments are tabled at Third Reading, I shall not complain.
I turn to Amendment No. 207, which is familiar because it has been debated on a number of occasions. I think we are all agreed that the holder of a floating charge should be one of the people who has access to a "quick route" into administration. The Bill achieves that. However, as I said previously—I know that my colleagues in the Commons have said the same thing—where the court has already appointed a provisional liquidator, it is right that only the court can replace that person with an administrator. To allow otherwise would be to usurp the powers of the court. It is not a matter between a creditor and the company; it is a question of the court making the appointment.
I want to say a word about Amendments Nos. 208 and 209, although the noble Lord, Lord Hunt, has made conciliatory noises about them. Following our discussion in Committee about the "weekend" situation—that is, the problem of court opening hours—I want to acknowledge that it is a real problem. Administration is fundamentally a court-based procedure. Therefore, we do not intend to amend the provision concerning when the administrator's appointment takes effect. However, we do intend that the amended insolvency rules will allow for appointments to be made other than during court opening hours.
I believe it was the noble Lord, Lord Sharman, who called it the "weekend problem"—that is, the question of what happens when the court adjourns on a Friday afternoon. The noble Lord, Lord Freeman, who I am sorry to see is not in his place today, raised the issue of a kind of fax-back arrangement, whereby something would be faxed to the court and the court's fax would acknowledge it by sending a reply. The Notice of Appointment would be sent to a dedicated central point by fax and the subsequent acknowledgement would show the date and time of receipt—that is, the date and time of appointment. The appointor would then be required to attend at the appropriate court at the first opportunity in order to file the original documents in the relevant court. I pay tribute to the noble Lord, Lord Freeman, for putting forward the suggestion, which forms the basis of the amendments that we shall make to the insolvency rules.
With my renewed apologies for not getting the draft rules to the Opposition Benches before today, and with my renewed appreciation of officials for their achievement in getting the draft to those Benches, I hope that Amendment No. 207 will not be pursued.
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