HL Deb 02 April 1985 vol 462 cc123-34

3.1 p.m.

The Parliamentary Under-Secretary of State, Department of Trade and Industry (Lord Lucas of Chilworth)

My Lords, I beg to move that the Bill be now further considered on Report.

Moved, That the Bill be futher considered on Report. —(Lord Lucas of Chilworth.)

On Question, Motion agreed to.

Clause 88 [Construction of Part II]:

The Lord Advocate (Lord Cameron of Lochbroom) moved Amendment No. 150: Page 69, line 26, leave out ("Schedule 19 to the 1985 Act") and insert ("Part I of Schedule 5 to this Act and "preferential creditor" shall be construed accordingly")

The noble and learned Lord said: My Lords, Clause 88(3) provides a definition of various terms and phrases that are used in Part II of the Bill which relates to corporate insolvency. A "preferential debt" is there defined as: a debt listed in Schedule 19 to the 1985 Act". I have explained to your Lordships that all debts which are afforded preferential status in insolvency proceedings, whether in winding up or in bankruptcy, will under the amendments which have already been made and which will be detailed further in Schedule 5 to the Bill be taken together. This amendment merely reflects the new approach which is being adopted dealing with preferential debts and replaces the reference to Schedule 19 to the 1985 Act with a reference to Part I of Schedule 5 to the Bill which will then apply both to a winding up and a bankruptcy. I beg to move.

On Question, amendment agreed to.

Lord Lucas of Chilworth moved Amendment No. 151: Page 69, line 43, leave out from ("if") to end of line 2 on page 70 and insert ("it passes a resolution for voluntary winding up or an order for its winding up is made by the court at a time when it has not already gone into liquidation by passing such a resolution.")

The noble Lord said: My Lords, in various places in Part II of the Bill reference is made to a company "going into liquidation". This amendment simply clarifies for the purposes of Part II the date on which a company "goes into liquidation" where a winding-up order is made against a company which is already being wound up voluntarily. In the case where a resolution for a voluntary liquidation has been passed prior to the court making a winding-up order, the date of the liquidation will be the date the resolution was passed. In the absence of a prior resolution for a voluntary winding up, the effective date of the liquidation will be the date the court makes a winding-up order. I beg to move.

On Question, amendment agreed to.

Schedule 4 [Amendments of 1985 Act]:

Lord Cameron of Lochbroom moved Amendment No. 152: Page 163, line 1, at end insert— ("10A.—(1) Section 196 (payment of debts out of assets subject to a floating charge) shall be amended as follows. (2) In subsection (2), for the words from "the relevant" to "payments" there shall be substituted the words "section (Preferential debts) of the Insolvency Act 1985 and Schedule 5 to that Act (read with Schedule 3 to the Social Security Pensions Act 1975)". (3) For subsections (3) and (4) there shall be substituted the following subsection— (3) For the purposes of this section Schedule 5 to the said Act of 1985 and Schedule 3 to the said Act of 1975 shall each have effect as if—

  1. (a) references to the relevant date were references to the date of the appointment of the receiver or the taking of possession as mentioned in subsection (1) above; and
  2. (b) references to the company going into liquidation were references to the appointment of the receiver or the taking of possession as so mentioned." ").

The noble and learned Lord said: With permission, my Lords, I shall also speak to Amendments Nos. 153, 348 and 351.

Amendment No. 153: Page 163, line 21, at end insert— ("12A. In subsection (3) of section 463 (effect of floating charge on winding up) for the words "section 614(2)" there shall be substituted the words "section (Preferential debts) of the Insolvency Act 1985.". 12B. In subsection (6) of section 464 (ranking of floating charges) for the words "section 614(2) (preferential debts in winding up)" there shall be substituted "section (Preferential debts) of the Insolvency Act 1985. 12C.—(1) Section 475 (priority of debts) shall be amended as follows. (2) In subsection (2), for the words "the provisions of Part XX relating to preferential payments" there shall be substituted the words "section (Preferential debts) of the Insolvency Act 1985 and Schedule 5 to that Act (read with Schedule 3 to the Social Security Pensions Act 1975)". (3) For subsections (3) and (4) there shall be substituted the following subsection— (3) For the purposes of this section Schedule 5 to the said Act of 1985 and Schedule 3 to the said Act of 1975 shall each have effect as if—

  1. (a) references to the relevant date were references to the date of the appointment of the receiver under section 469(6) or 470(5); and
  2. (b) references to the company going into liquidation were references to that appointment.".").
Amendment No. 348: Clause 202, page 155, line 14, leave out ("11 and ") and insert ("10A to") Amendment No. 351: Clause 202, page 155, line 24, leave out ("paragraph") and insert ("paragraphs 12A to").

Amendments Nos. 152 and 153 are intended to have the same effect, except that the former applies in England and Wales in relation to Section 196 of the 1985 Act and the latter, by virtue of Sections 463, 464 and 475, to Scotland. Amendments Nos. 348 and 351 are consequential.

The purpose of the amendments is straightforward. They again form part of the package of amendments designed to modify the status of preferential debts. It is intended of course that Schedule 5, by virtue of amendments which we later propose, will replace Schedule 19 to the Companies Act 1985, and this will lead to harmonisation in the list of debts attracting preferential status as between insolvency and bankruptcy.

It is also necessary to amend the sections of the Companies Act to which I have already referred to apply the provisions of Schedule 5 into receivership and to specify that the relevant date for the purpose of that schedule is the date of the receiver's appointment, or, in England and Wales, that the relevant date is the date on which the chargeholder takes possession of the charged assets. No change is intended in the way in which preferential status is imported into receivership.

I beg to move.

On Question, amendment agreed to.

Lord Cameron of Lochbroom moved Amendment No. 153:

[Printed above,]

On Question, amendment agreed to.

Lord Cameron of Lochbroom moved Amendment No. 154: Page 163, line 34, at end insert— ("14A. In sections 512(3), 515(5), 518(2), 622(7) and 624(7) (being provisions which refer to regulations under section 664), for the word "regulations" there shall be substituted the word "order".").

The noble and learned Lord said: My Lords, with your Lordships' permission, I shall also speak to a number of other amendments, those being Amendments Nos. 168, 248, 258, 262, 275, 280 and 323.

Amendment No. 168: Page 166, line 2, at end insert— ("28A.—(1) In subsection (1) of section 664 (power to alter monetary limits), for the words "regulations in a" there shall be substituted "order made by". (2) For subsection (2) of that section there shall be substituted the following subsections— (2) No order under this section increasing or reducing any of the money sums for the time specified in section 512(2), 515(3) or 518(1)(a) shall be made unless a draft of the order has been laid before and approved by a resolution of each House of Parliament. (3) A statutory instrument containing an order under this section, other than an order to which subsection (2) above applies, shall be subject to annulment in pursuance of a resolution of either House of Parliament." "). Amendment No. 248: Schedule 5, page 167, line 43, leave out ("the prescribed amount") and insert ("such amount as may be prescribed by order made by the Secretary of State"). Amendment No. 258: Page 169, line 17, leave out ("(3)"). Amendment No. 262: page 169, line 37, at end insert— ("(5) An order under paragraph 6 of Part I of this Schedule may contain such transitional provisions as may appear to the Secretary of State necessary or expedient. (6) An order under the said paragraph 6 shall be made by statutory instrument which shall be subject to annulment in pursuance of a resolution of either House of Parliament."). Amendment No. 275: After Clause 184, insert the following new clause:

("Orders prescribing monetary limits.

.—(1) The Secretary of State may by order prescribe amounts for the purposes of the following provisions of this Part—

  1. (a) section 103;
  2. (b) section 155(3);
  3. (c) section 159(2) and (3);
  4. (d) section 163(2);
  5. (e) section 165(1); and
  6. (f) section 166(2);
and references in this Part to the amount prescribed tar the purposes of any of those provisions, and references in those provisions to the prescribed amount, shall be construed accordingly. (2) An order under this section may contain such transitional provisions as may appear to the Secretary of State necessary or expedient. (3) An order under this section shall be made by statutory instrument which shall be subject to annulment in pursuance of a resolution of either House of Parliament."). Amendment No. 280: Clause 186, page 144, line 40, after ("means") insert ("(subject to section (Orders prescribing monetary limits) above)"). Amendment No. 323: Schedule 9, page 191, line 17, column 3, at end insert ("and the words "and paragraph 12 of Schedule 19" ").

These amendments are closely connected to Amendment No. 154. The purpose of this group of amendments is to achieve a rationalisation of various monetary limits contained in the Bill and in the Companies Act 1985.

At present certain sections of the Companies Act refer, in connection with relatively minor matters, to specified monetary limits. It is necessary to amend these sums from time to time to take account of changes in monetary values and they may at present be altered by regulations pursuant to Section 664 of the 1985 Act. Such regulations require affirmative resolutions by virtue of subsection (2) of that section. However, the provisions in Part III of the Bill governing procedures for personal bankruptcy, which are comparable to these Companies Act provisions, will be alterable by a statutory instrument, subject to the negative resolution procedure.

To ensure compatibility between the bankruptcy and winding-up codes, the proposed amendments to Schedule 4 provide that the money sums specified in Sections 622 and 624 of the Companies Act and in paragraph 6 of Schedule 5 to the Bill will, in future, be alterable by the Secretary of State by order made by statutory instrument which will be subject to the negative resolution procedure. The sums specified in Sections 512, 515 and 518 of the 1985 Act will be alterable by order, but, in view of their importance, and in line with the corresponding provisions in the Bill, they will be alterable by order subject to affirmative resolution.

The clauses of the Bill listed in Amendment No. 275 all contain the monetary limits which are under the Bill as drafted to be prescribed in the rules. It is considered that these, too, would be more conveniently dealt with by the Secretary of State in an order made by statutory instrument, as they are now under the existing provisions of Section 1 and Schedule 1 to the Insolvency Act 1976.

The remaining amendments are purely consequential on these main amendments. My Lords, I beg to move.

Lord Bruce of Donington

My Lords, I am grateful to the noble and learned Lord for having explained these various amendments and their association one with another. However, I observe that at the conclusion of Amendment No. 275, to which the noble Lord has referred, it says that the statutory instrument shall be subject to annulment in pursuance of a resolution of either House of Parliament". That seems to be something rather new that has crept in here, because normally under the negative resolution procedure the provisions go through both Houses, or should go through both Houses. Can the noble and learned Lord explain why the normal negative resolution procedure should not be followed in these cases? Will he also explain why some should go through under the positive resolution procedure—that is to say, by approval of the instruments—and others should be by negative resolution procedure? Will the noble and learned Lord explain why he thinks that some should still continue to go by the rules? It seems that we are adopting three different methods here without having any particular distinction or any explanation for the order of priority accorded to these various instruments to which the noble and learned Lord has referred.

Lord Cameron of Lochbroom

My Lords, with leave, perhaps I should answer simply to say that, as I think I explained in what I said at the outset, there is a division made in the use of resolutions of the House by virtue of the importance, or lesser importance, of the limits in the places where they occur. The matter of the limits which are presently prescribed in the rules is of course being brought back to be dealt with by the Secretary of State under an order made by statutory instrument.

So far as the question of the procedures of both Houses is concerned, obviously I can say no more. I understand these instruments will go through both Houses. This is simply a matter of drafting, and, as I think the noble Lord opposite has already indicated, it is a method of drafting which has been employed elsewhere. I trust that that will at least give some explanation of the points which were raised by the noble Lord.

Lord Bruce of Donington

My Lords, I am grateful to the noble Lord. This is not a matter with which your Lordships should be troubled. It is a matter of detail which we can safely leave for consideration in another place.

On Question, amendment agreed to.

Lord Cameron of Lochbroom moved Amendment No. 155:

[Printed earlier: col. 52.]

The noble and learned Lord said: My Lords, perhaps I may deal with Amendments Nos. 155 and 156. Amendment No. 155 has already been considered, and I therefore beg to move it now.

Lord Bruce of Donington

My Lords, I accept the position that the noble and learned Lord has set out in respect of Amendment No. 156. It might perhaps be for his convenience to note that Amendments Nos. 157 to 166 have already been considered.

On Question, amendment agreed to.

Lord Cameron of Lochbroom moved Amendments Nos. 156 to 165:

[Printed earlier: cols. 52–53.]

The noble and learned Lord said: My Lords, I am grateful to the noble Lord, Lord Bruce. With the leave of the House, perhaps I may now deal with Amendments Nos. 156 to 165 en bloc. May I explain that they arise out of Amendment No. 21?

On Question, amendments agreed to.

Lord Cameron of Lochbroom moved Amendment No. 166:

[Printed earlier: 1/4/85, col. 53.]

The noble and learned Lord said: My Lords, my noble friend Lord Lucas dealt with this when speaking to Amendment No. 93. I beg to move.

On Question, amendment agreed to.

3.15 p.m.

Lord Cameron of Lochbroom moved Amendment No. 167: Page 165, line 5, leave out paragraph 24.

The noble and learned Lord said: My Lords, I spoke to this amendment when speaking to Amendment No. 130, as an amendment consequential upon that matter. I beg to move.

On Question, amendment agreed to.

Lord Cameron of Lochbroom moved Amendment No. 168:

[Printed earlier: col. 125.]

The noble and learned Lord said: My Lords, I spoke to this amendment with Amendment No. 154.1 beg to move.

On Question, amendment agreed to.

Lord Cameron of Lochbroom moved Amendment No. 169: Page 166, line 10, leave out paragraph 31.

The noble and learned Lord said: My Lords, paragraph 31 of Schedule 4 to the Bill provides that where a winding-up order is made immediately upon the discharge of an administration order the relevant date for the purpose of calculating any preferential claims payable in the liquidation is to be the date of the making of the administration order and not the date of the winding-up order. Following the harmonisation of both individual and corporate insolvency codes as regards preferential debts in Schedule 5 to the Bill, the reference to the relevant date in this instance in Schedule 4 is to be deleted and it will be re-stated in Schedule 5 by way of Amendment No. 253.

Amendment No. 253: Schedule 5, page 168, line 10, at beginning insert— ("In this Schedule "the debtor"—

  1. (a) in relation to a winding up, means the company which is being wound up; and
  2. (b) in relation to the distribution of a bankrupt's estate, means the bankrupt.
(2) In relation to a company, the references in this Schedule to the relevant date are references—
  1. (a) where the company is being wound up by the court and the winding-up order was made immediately upon the discharge of an administration order, to the date of the making of the administration order;
  2. (b) in a case not falling within paragraph (a) above where the company is being wound up by the court and had not commenced to be wound up voluntarily before the date of the making of the winding-up order, to the date of the appointment (or first appointment) of a provisional liquidator or, if no such appointment has been made, to the date of the making of the winding-up order; and
  3. (c) in a case not falling within paragraph (a) or (b) above, to the date of the passing of the resolution for the winding up of the company.
 (3) ")

That being so, and taking this amendment along with Amendment No. 253, I beg to move.

On Question, amendment agreed to.

Clause 95 [Decision of creditors' meeting]:

Lord Cameron of Lochbroom moved Amendment No. 170: Page 75, line 37, at end insert— ("(9) In this section "preferential debt" means any of the debts which in the distribution of a bankrupts' estate are, under section 145 below and Schedule 5 to this Act (read with Schedule 3 to the Social Security Pensions Act 1975), to be paid in priority to all other debts, and "preferential creditor" shall be construed accordingly. (10) For the purposes of this section Schedule 5 to this Act and Schedule 3 to the said Act of 1975 shall each have effect, in relation to a debtor who is not an undischarged bankrupt, as if—

  1. (a) references to the relevant date were references to the date or the interim order made with respect to his proposal; and
  2. (b) references to the debtor being adjudged bankrupt were references to the making of that order.")

The noble and learned Lord said: My Lords, Clauses 92 to 100 of this Bill allow debtors to enter into voluntary arrangements with their creditors as an alternative to bankruptcy. The debtors' proposals will have to provide for the payment of certain creditors in priority to others and the proposed amendment stipulates that these preferential debts will be the same as in a bankruptcy. The amendment also specifies that the relevant date for these dates is the date of the interim order, which, as noble Lords may recall, is the order made by the court to afford the debtor time and protection from his creditors while his proposals are formulated. I beg to move.

On Question, amendment agreed to.

Clause 99 [Preliminary.]:

Lord Lucas of Chilworth moved Amendment No. 171: Page 79, line 17, after ("is") insert ("domiciled in England and Wales, is").

The noble Lord said: My Lords, with permission, I shall speak also to Amendment No. 173, which makes a minor drafting amendment to Clause 99. Amendment No. 173: Page 79, line 27, leave out second ("a").

Section 4(1) of the Bankruptcy Act 1914 enables the presentation of a bankruptcy petition against a person who is domiciled in England and Wales. That ground is not presently included in Clause 99. Representation has been made that if a debtor domiciled in England and Wales incurs debts but nevertheless remains abroad for more than 12 months he can avoid an attempt by his creditors to recover their claims through bankruptcy proceedings. We agree that the clause is too restrictive. This amendment therefore reintroduces the domicile ground for the presentation of a bankruptcy petition to enable creditors to pursue their claims where the debtor, though domiciled in England and Wales, seeks to avoid his creditors by remaining abroad.

We carefully considered amendments tabled during Committee, which would have lengthened the period of residence and business qualifications under this Clause from one to three years. However, we have concluded that the reintroduction of a domicile ground will be sufficient to restore the scope of the Bill to that of the present legislation. In addition, the term "carrying on business" has been construed widely by the courts and even if a debtor's business has ceased some years before he is still regarded as carrying on business for the purposes of bankruptcy jurisdiction so long as debts of the business are still outstanding in England and Wales. We therefore feel that no lengthening of the period of 12 months is necessary.

Amendment No. 173 makes a minor drafting improvement to the Bill, in that Clause 99(3) expands upon the meaning of the expression "carried on business" as used in Clause 99(2). This is concerned with the concept of carrying on business generally rather than the carrying on of a business. The purpose of the amendment is to achieve consistency between subsections (2) and (3) of Clause 99. I beg to move.

On Question, amendment agreed to.

Lord Bruce of Donington moved Amendment No. 172: Page 79, line 19, leave out ("twelve months") and insert ("three years").

The noble Lord said: My Lords, the noble Lord, Lord Lucas of Chilworth, in talking on Amendments Nos. 171 and 173, has touched on the gound that is dealt with in this amendment. He seems to think that the change in the domiciliary rules is quite satisfactory and that the time should remain at 12 months. I venture to suggest that this is still a matter of some legal dubiety and that it would be far better to extend the period of 12 months to three years. Indeed, this is what the amendment seeks to do. It extends the time during which a bankruptcy petition could be presented against a person who had left this country from one year to three years. A director of a company who has left the country when the company collapses and who is later found guilty of wrongful or fraudulent trading or misfeasance often cannot be made bankrupt because his liability is not established until more than a year after his departure.

I would venture to give a degree of personal experience in matters of this kind. When one investigates the affairs of a company that has gone into liquidation, particularly where there are allegations of fraud, the allegations are not always justified but frequently they are. They warrant detailed investigation. When a liquidation takes place, anyone who investigates the state of affairs of a particular company or indeed the conduct of directors is usually confronted with crates or tea-chests full of documents, often all muddled together. One has to examine them without enlightenment from people who could explain the various documents to the investigators because they have long since departed.

In practice, therefore, the investigation of a company, based as it is upon a minute examination of the various documentation that is left behind, takes a very long time. In some cases, it has to be accompanied by detailed investigation, often involving the investigator, who feels perhaps that this is work more traditionally associated with the role of a private detective, in simply finding our what the director has done or is alleged to have done. This often needs interrogation and a whole series of personal inquiries which, in my experience, particularly where the direcor has gone abroad, takes rather longer than a year even with the best will in the world and even with the use of the most competent staff to carry out detailed investigative work.

In my personal experience, a year is not always adequate. I do not believe that there is anything to be lost by extending the period in respect of a director, in these circumstances, who goes abroad. In the small and fair district of Marbella in Spain, there will be many smiling faces if this amendment is resisted by the Government. This is not a contentious political matter. I suggest most earnestly that the Government accept the amendment that I have ventured to lay before your Lordships and that, so far as I am capable, I have explained to you. I beg to move.

Lord Denning

My Lords, I support the amendment. We now know what happens in this country. People may be fraudulent or they may be competent in getting hold of other people's assets. They do not stay in this country to face the music. They fly abroad, to Spain of wherever it may be, to try to escape the consequences. One may find left behind all sorts of files, documents and papers whether in the director's office or hidden elsewhere. It may well take more than a year to catch up with them. There is no reason whatever why the period should not be extended. The time should not be limited to 12 months. Even if it takes three years, one should try to catch up with them. I certainly support the amendment.

Lord Lucas of Chilworth

My Lords. I touched upon this during our short discussion on the previous amendment. I said that we had carefully considered an amendment put down at Committee stage, which was identical to this. We concluded that the reintroduction of the domicile ground now achieved by Amendment No. 171 that had been removed from the Bill by virtue of the repeal of the 1914 Bankruptcy Act would be sufficient to restore the scope of that Bill to the present legislation.

In addition, as I previously mentioned, the term "carrying on business" has been construed widely by the courts and even if a debtor's business has ceased some years before, he is still regarded as carrying on business for the purposes of bankruptcy jurisdiction so long as debts of the business are still outstanding in England and Wales. The relevant judicial authorities for this wide interpretation of the expression "carrying on business" are to be found in the 1950 case of Theophile v. the Solicitor-General and the 1962 case of Re Bird.

I bow very much to the experience of the noble Lord, Lord Bruce of Donington, and always pay heed to what the noble and learned Lord, Lord Denning, has to say. For a moment, however, I should like to turn to the example that the noble Lord, Lord Bruce of Donington, gave. Even though a director had been out of the country for more than a year, we consider that, in many cases, the director will remain domiciled in England and Wales and still therefore subject to the bankruptcy jurisdiction. We feel that there is no necessity for a lengthening of the 12-month period. But, in the circumstances that have been raised by both the noble Lord and by the noble and learned Lord, I am prepared to have a further look at the matter to see if any lengthening of the period will add anything at all to the extension of jurisdictional grounds already achieved by the insertion into the clause of Amendment No. 171.

We have received representations from interested parties on this and similar points in connection with Clause 99. We shall be happy to review the present clause. With that assurance, I hope that the noble Lord will feel able to withdraw the amendment this afternoon.

Lord Bruce of Donington

My Lords, I am most grateful to the noble Lord for his consideration of the matter. Perhaps while he is considering it, he may take into account some potential cases—I cannot refer to them in any other terms—of certain members of leading insurance syndicates who have gone abroad and no prosecution has yet been brought against them despite questions that have been asked in the House. Will the noble Lord give consideration to the question whether already, since two years have elapsed since their association of operations, if bankruptcy proceedings were brought against them, they could possibly succeed if the existing clause remains in operation? I invite the noble Lord to consider that among other things when he gives consideration to the amendment. In the meantime, in view of the noble Lord's assurance, I ask the leave of the House to withdraw the amendment.

Amendment, by leave, withdrawn.

3.30 p.m.

Lord Lucas of Chilworth moved Amendment No. 173:

[Printed earlier: col. 130.]

The noble Lord said: My Lords, I spoke to this amendment with Amendment No. 171 earlier. I beg to move.

On Question, amendment agreed to.

Lord Lucas of Chilworth moved Amendment No. 174: Page 79, line 36, at end insert— ("(5) The court shall have a general power, if it appears to it appropriate to do so on the grounds that there has been a contravention of the rules or for any other reason, to dismiss a bankruptcy petition or to stay proceedings on such a petition; and, where it stays proceedings on a bankruptcy petition, it may do so on such terms and conditions as it thinks fit.").

The noble Lord said: My Lords, it may for the convenience of the House in dealing with this amendment that I also speak to Amendments Nos. 176 to 180.

Amendment No 176: Clause 101, page 82, line 13, leave out subsection (5). Amendment No 177: Page 81, line 39, leave out ("Without prejudice to subsection (5) below"). Amendment No. 178: Clause 103, page 82, line 36, at beginning insert ("Subject to subsection (5) below,"). Amendment No. 179:Page 82, line 37, leave out ("make a bankruptcy order unless") and insert ("not make a bankruptcy order if"). Amendment No. 180: Page 83, line 8, leave out ("shall") and insert ("may").

These amendments amend Clauses 101 and 103, and are closely connected. They are desirable to ensure that the court in dealing with all bankruptcy petitions which come before it is given the necessary discretion to dismiss the petition or to stay the proceedings if it thinks it appropriate to do so. Such a discretion is conferred on the court at present by Clause 101(5) of the Bill, but only in the case of a creditor's petition. Under Clause 99, however, petitions may be presented not only by creditors but by the debtor himself. Furthermore, petitions can be presented for default in connection with a voluntary arrangement under Chapter I of Part III of the Bill. We consider it important that the court have the necessary discretion in all these cases.

Amendment No. 180 also makes it clear that in any case where the court would not feel it appropriate to make a bankruptcy order it is not to be under an obligation to refer the debtor to an insolvency practitioner for consideration of the prospect of a voluntary arrangement. The court will be entitled to use its discretion in making such a referral. I beg to move these amendments.

On Question, amendment agreed to.

Clause 100 [Creditor's petition]:

Lord Lucas of Chilworth moved Amendment No. 175: Page 80, line 7, after ("payable") insert ("to the petitioning creditor, or one or more of the petitioning creditors,").

The noble Lord said: My Lords, the provisions of Clause 100(2)(b) as they presently stand could be interpreted to mean that as long as a creditor is aware of other debts which, aggregated with his own, equal or exceed the bankruptcy level, then he may present a bankruptcy petition, irrespective of the fact that his claim does not amount to the requisite sum. The other creditors need not join in the petition. We do not consider it desirable that a creditor should be able to petition in respect of another's debt. This is not in accordance with the existing law, whereby petitioning creditors may only petition in respect of their own debts. The relevant provision is to be found in Section 4(1)(a) of the Bankruptcy Act 1914. These amendments clarify the position and restate the substance of the present law. I trust therefore that they will be acceptable to your Lordships.

On Question, amendment agreed to.