TRANSACTIONS AT AN UNDERVALUE AND PREFERENCES (ENGLAND AND WALES) (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. 36 and 57 to 59.

§ Mr. Howard
These amendments modify the provisions of the Bill relating to preferences given to creditors and transactions carried out at an undervalue, both in winding up and in bankruptcy.
Amendment No. 35 has been made as a result of representations received from the Law Society. The expression in the ordinary course of ' in relation to a company's business has been replaced by the expression for the purpose of carrying on", so that it is clear that one-off transactions in genuine special circumstances—for example, rescue operations — are not automatically caught by the undervalue transaction provisions.
Amendments Nos. 36 and 59, which have been made following representations from both the Law Society and the practitioners, ensure that employees of a bankrupt or insolvent company are not regarded as connected persons or associates for the purposes of preferences and undervalue transactions. Here we have in mind instances where persons are connected solely because of their employment. Those who are also directors or officers of a company will still be treated as connected persons.
It was not intended that the normal receipt by employees of wages and related benefits should be subject to undue scrutiny. These amendments provide that, in relation to someone who is an employee only, transactions with him will be reviewable, as they are under the present law, for a six-month rather than a two-year period. There will be no presumption that a payment to such persons is a preference and, as regards transactions at an undervalue, they will not be required to demonstrate, in order to validate the transactions, that the company or individual was insolvent.
Amendments Nos. 57 and 58 insert necessary drafting changes consequential upon Commons amendment No. 333.
I commend the amendments to the House.

§ Mr. Gould
Despite my best efforts and arguments, the Government and the Minister resolutely refused to accept amendments that I tabled in Committee which would have given effect to and recognised the special interest that employees have in the continuing viability of a company, particularly under the administration order procedure. I am glad to see that in this tiny respect, in the ground covered by amendments Nos. 36 and 59, there is some recognition of the special position of employees. I welcome those amendments, but I would prefer to have seen some concession on the more substantial ground.