CLAUSE 18.—(Priority in bankruptcy, winding up, etc., of sums ordered to be paid under this Act.) (Hansard, 18 February 1944)

§ Mr. Bellenger (Bassetlaw)
I should like a little explanation on this Clause. There is a provision whereby a claimant who is awarded compensation, shall be placed in a priority class with other creditors of a bankrupt company or a company going into liquidation. That is a feature I welcome. He is I understand to have priority with certain other classes under the Bankruptcy Act, 1914, and especially Sub-section (3), where I take it he is on a level with receivers or debenture holders. Do I also understand that a creditor will be in exactly the same position as the first priority creditors of such companies going into liquidation or bankruptcy?

§ The Solicitor-General
If my hon. Friend will look at the words of the Clause, he will see that included among the debts under Section 33 of the Bankruptcy Act, that are to be paid in priority is any sum ordered under this Act to be paid by way of compensation. The degree of priority which we are giving is the same as that of wages up to a limit of £50 in respect of any individual case, and I should have thought that that was a proper place to put any debt that comes into being through compensation paid under this Act. I am not clear whether my hon. Friend thinks that we have not given it sufficient priority. The principle of giving priority to certain debts is recognised as to wages. As many of my hon. Friends opposite are very well aware, and in some cases only too tragically aware, it was given under the various Compensation Acts, but if my hon. Friend considers it in that light I think he will agree that we have given it the proper degree of priority.

§ Mr. Bellenger
Perhaps the hon. and learned Gentleman has not quite understood my point. It looks from the wording of Sub-section (3) as if the creditor workman will be in a priority class equal 590 to the debenture holders which, as my right hon. and learned Friend knows, is a very high priority in such bankruptcy cases. That is what I want to know.

§ The Solicitor-General
Is the hon. Member referring to Sub-section (3)?

§ Mr. Bellenger
Yes, I am referring to Sub-section (3), from which it appears that such a person would be on the same level, as far as priority is concerned, as the debenture-holder. Is that so, and if so, what happens to the amount of £100 which we have already agreed to on a previous Amendment? The Solicitor-General has just referred to Should it not follow, therefore, that as we have agreed to raise the £50 to £100, it would follow in this Clause as well?

§ The Solicitor-General
If I may deal with the second point, I said that they came in the same class of priority as wages up to £50, which forms a class of priority. I think that clears up the point of raising it to £100. It is a matter of penalty, which is different. With regard to the company matter, the position is this. If my hon. Friend looks at the first two lines of Sub-section (3), he will see that it says: debentures of a company secured by a floating charge. Then that charge is crystallised by a receiver being appointed. Another method of the debenture-holder crystallising his security is taking possession. These are the two methods of procedure which the debenture-holder can exercise. Then, when that is done, there shall be included among the debts which are to be paid in priority to the principal and interest of the debenture, the compensation awarded under this Act. I hope that I have made it clear. If I might put it in a sentence it is this: the debenture-holder, in order to become secured, has to have a receiver appointed and his business has to be carried on by the receiver. Before he is paid out his debts have to be paid.