MEETING OF CREDITORS IN CREDITORS' VOLUNTARY WINDING-UP. (Hansard, 28 October 1985)

§ Mr. Howard
I beg to move, That this House doth agree with the Lords in the said amendment.

§ Mr. Speaker
With this it will be convenient to take Lords amendments Nos. 41 to 48, 70 to 73, 75, and 77 to 79.

§ Mr. Howard
Amendment No. 34 is the first of a group of amendments consisting of drafting and technical amendments relating to winding-up, bankruptcy and miscellaneous matters. They either improve upon and give greater clarity to the Bill or merely involve the reenactment of current provisions in insolvency legislation.
The amendments fall into four categories: provisions which deal with winding-up—amendments Nos. 34, 75 and 77; definitions—amendments Nos. 41, 43 and 44; bankruptcy—amendments Nos. 42, 45, 46, 47, 48 and 79; and miscellaneous clauses—amendments Nos. 71. 72, 73 and 78.
Should the House so desire, I am in a position to expand on any individual amendment. Failing that, I do not intend to take up time in going into detail on those matters, and commend the amendments to the House.

§ Mr. Hanley
With regard. to amendment No. 77, the Commons amendment No. 458 introduced a new subsection (1A) to section 518 of the Companies Act 1985 by which a company is also deemed unable to pay its debts if the value of its assets is less than its liabilities, taking into account its contingent and prospective liabilities. Practitioners have commented that the amendment introduced a balance sheet test to accompany the existing cash flow test, with which we all agree.
In the debate in the other place the Minister stated that the Commons amendment does not change the law but only gives effect to the way in which the courts have interpreted section 518 of the Companies Act 1985. In support of that contention, the Minister quoted Mr. Justice Nourse in Re: Bond Jewellers, when he said: what I am required to do is to take into account the contingent and prospective liabilities. That cannot mean that I must simply add them up and strike a balance against assets. It remains the fear of insolvency practitioners that that is precisely what the new subsection (1A) of section 518 will require the courts to do. It is alarming that such a fundamental matter should remain a matter of such uncertainty at this stage. May I invite my hon. and learned Friend to seek further counsel on this matter? It is fundamental to the definition of insolvency to know exactly what assets are meant to cover what liabilities

§ Mr. Howard
As I understand it, the point made by my hon. Friend relates to an amendment that was considered in the other place but not to an amendment made by another place in relation to the business before the House this afternoon. It does not, therefore, arise for consideration this afternoon and, in any event, I would not wish to add anything to the words of the learned judge cited both in another place and by my hon. Friend.