Insolvency (Special Arrangements) (Hansard, 23 March 1983)

§ Mr. Nicholas Baker (Dorset, North)

I beg to move, That leave be given to bring in a Bill to amend the law relating to insolvency. We are all painfully aware of the world recession. Businesses have weathered some difficult trading conditions and a number of them have perished. We may disagree about what the Government can do about a recession or unemployment, but I think that every hon. Member will agree that a Government have a part to play in creating the economic environment to encourage sound businesses and the maintenance of jobs where they can.

There is no doubt that a number of businesses are foundering and have foundered under our insolvency laws and procedures. English insolvency law is out of date and our procedures are unnecessarily out of date, cumbersome and bureaucratic. The creditors' rules are unfair. Once a company becomes ensnared in court proceedings, like a fly in a spider's web it can never get out, even if the business is fundamentally sound. The same applies to bankruptcies of individuals. I believe that the law needs tightening to deal with rogues.

There is a need, which the previous Labour Government recognised and which I believe the present Government recognise, for a new, comprehensive insolvency system. A committee under Sir Kenneth Cork was appointed in 1977 to examine just that. It produced part 1 of its report in April 1981 and part 2 in February 1982. The report contains a detailed system to deal with and reform the insolvency law. It is the product of the best working experience. It is innovative, well argued, radical and of immense authority. The report has been welcomed on both sides of the House.

In seeking leave for the Bill to be introduced, I have the support of hon. Members from both sides of the House. I know that my hon. Friend the Minister for Consumer Affairs, who cannot be present today, welcomes the report. However, the Government have taken no action on 876 it. Meanwhile, out-of-date and cumbersome legal procedures trundle on and individuals and companies whose financial position is facing short-term difficulties but which could survive are being brought down by out-of-date procedures and unfair rules. Jobs are being lost unnecessarily.

I should like to see the Cork report enacted as a whole but I believe that Department officials are dragging their feet. They should start work now. Legislative time will be available more or less however we compute the date of the next general election. I believe that any new Government would want to continue any unfinished work commenced by this Government. If that cannot happen, and if to do that would block the usual channels, there are some urgent matters that can be taken from the report and dealt with now.

I have the support of Members on both sides of the House for the Bill, in which I seek to do three things. First, the Bill requires registration by receivers and liquidators of the cause of the failure. Secondly, it seeks to tackle the roguery that is involved in consecutive and collusive insolvencies and to tighten up the rules to deal with delinquent directors. Thirdly, it seeks to provide a system of voluntary arrangements to enable debtors to agree arrangements with creditors under which the business can continue.

This is not an esoteric matter that concerns only lawyers. The present insolvency rules are unfair and are costing jobs. The matter concerns us all and is urgent.