§ `(1) Where a person fails to make any payment which he is required to make by virtue of an administration order under Part VI of the County Courts Act 1984, the court which is administering the estate of that person under that order may. if it thinks lit, revoke the administration order and make an order directing that this section shall apply to that person for such period, not exceeding two years, as may be specified in the order.
§ (2) A person to whom this section applies by virtue of an order under subsection (1) above shall not, except with the leave of the court which made that order, act as director or liquidator of, or directly or indirectly take part or be concerned in the promotion, formation or management of, a company (within the meaning of section 1 above).
§ (3) A person to whom this section so applies shall not—
- (a) either alone or jointly with another person, obtain credit to the extent of the amount prescribed for the purposes of section 179(1)(a) above or more; or
- (b) enter into any transaction in the course of or for the purposes of any business in which he is directly or indirectly engaged, without disclosing the fact that this section applies to him to the person from whom he obtains the credit or, as the case may be, with whom the transaction is entered into.
§ (4) The reference in subsection (3) above to a person obtaining credit includes a reference to—
- (a) a case where goods are bailed or hired to him under a hire-purchase agreement or agreed to be sold to him under a conditional sale agreement; and
- (b) a case where he is paid in advance (whether in money or otherwise) for the supply of goods or services.
§ (5) A person who contravenes this section shall be guilty of an offence and liable—
- (a) on summary conviction, to imprisonment for a term not exceeding six months or to a fine not exceeding the statutory maximum or to both;
- (b) on conviction on indictment, to imprisonment for a term not exceeding two years or to a fine or to both. '.—[Mr. Fletcher.]
§ Brought up, and read the First time.550
§ Mr. Fletcher
The Insolvency Bill has repealed most sections of the Insolvency Act 1976, including section 11. which enables the court to make a receiving order where a debtor has failed to make the payments due under a county court administration order. For a number of practical reasons, that section has never been brought into force.
A large number of administration orders are revoked each year. If the section were used to its fullest extent, the Official Receiver would have to deal with numerous extra small cases, which probably did not warrant the investigation. I appreciate that the courts should be able to apply some form of sanction where a debtor is subject to a county court administration order and then does not comply with its terms. Such a debtor has similar privileges to those of a bankrupt, in that the order prevents creditors from pursuing remedies in respect of debts covered by the order.
While preserving the right of creditors, or the debtor himself, to apply for formal bankruptcy, the new clause will allow the court to impose some of the restrictions of bankruptcy without necessitating full bankruptcy proceedings. Of course, the restrictions may be revoked only when the person fails to make the payments under the order. As in the majority of cases the person will have no assets of value and only minimal debts, that does seem to be an appropriate way of dealing with persons who are subject to the administration order procedure.
The imposition of such restrictions will not preclude creditors from taking normal recovery steps, including bankruptcy proceedings, but they will no doubt have regard to the practicalities of recovering anything from a person who has few or no assets.
§ Question put and agreed to.
§ Clause read a Second time, and added to the Bill.