HL Deb 23 October 1985 vol 467 cc1192-4

73A In subsection (2) at end insert ("and with due regard to the interests of the employees")

87 Clause 28, page 21, line 12, leave out from beginning to 'shall' in line 19 and insert— '(1) This section applies where—

  1. (a) proposals have been approved (with or without modifications) under section 26 above; and
  2. (b) the administrator proposes to make revisions of those proposals which appear to him substantial.
(2) The administrator'.

Certain elements of Clause 19 dealing with the sale of property subject to a security are replaced by Amendment No. 72, to which I spoke earlier. After consultation with practitioners we felt that the existing Clause 19 might well be defective in its approach to the powers of the administrator. The granting to the administrator of the powers and duties of directors does not properly reflect the relationship that should exist between the administrator and the company to which he is appointed. Amendment No. 71 therefore places the administrator in a similar position in relation to the company as the floating charge receiver but with additional powers and also subject to the fundamental difference that he is not appointed on behalf of an individual creditor.

He takes over control of the company's affairs, business and property with the power to do all such things as be necessary for their management as well as the specific powers set out in Schedule 2 to the Bill. The administrator will also have the power to dismiss and appoint directors and will be protected by subsection (3) of the new clause from any power of the company to hinder him in the discharge of his functions. These provisions are important because they will enable him to assemble a fresh management team as might be necessary.

This will be of particular significance where he is acting to pursue the objective of survival of the company.

The administrator is further empowered by subsection (2) (b) of the new clause to call meetings of members of creditors of the company. The purpose here is to enable the administrator to consult creditors and members on matters of importance and on which their assent is desirable.

I come now to Amendment No. 73 and the administrator's general duties. The clause restates in part the current provisions of the Bill. Subsections (1) and (3) are drawn from subsections (1) and (7) of existing Clause 19. Subsection (2) of this clause is based on subsection (1) of Clause 28, and replaces it. It also deals with the position of the administrator and his ability to manage the business in the period following the making of the order but preceding the creditors' meeting.

Although it is not expected that there will be a significant problem here, because the creditors and the administrator will of necessity need to work together, he ought not to be unfettered during this period. Accordingly subsection (2) (a) of the new clause provides that the administrator shall manage the business in accordance with such directions as the court may give.

The amendment to Amendment No. 71 brings administration into line with the winding-up code and receiverships which provide statutory sanction for the giving of directions by the court to compulsory liquidators, receivers and debenture holders.

The new clauses are now silent on the question of payments to pre-administration creditors, except in the specific circumstances which will apply in relation to the new clause introduced by Amendment No. 72. This will enable the administrator to make payments generally so long as they are intended to achieve the purpose for which he was appointed and do not unfairly prejudice any creditors. If he acts in a way which is unjust in relation to a creditor or a group of creditors the court will be able to rectify matters under the provisions of Clause 30.

Finally, Amendment No. 87 is essentially a drafting amendment consequential on Amendment No. 73. The administrator's general duty to manage the affairs of the business in accordance with his proposals presently in subsection (1) of Clause 28 has been transferred to the new clause dealing with his general duties; that is in Amendment No. 73, subsection (2). Thus the amendment deletes subsection (!) and specifies when the section now applies. The creditors are to approve substantial revisions to the administrator's proposals. I beg to move.

Moved, That this House do agree with the Commons in their Amendment No. 71 as amended by Amendment No. 71 A.—(Lord Lucas of Chilworth.)

On Question, Motion agreed to.