HL Deb 23 October 1985 vol 467 cc1153-7

48 Page 11, line 8, leave out 'promote either' and insert 'achieve one or more'.

49 Page 11, line 15, at end insert '; and such an order shall specify the purpose or purposes for whose achievement it is made'.

Lord Lucas of Chilworth

My Lords, I beg to move that this House do agree with the Commons in their Amendments Nos. 48 and 49 en bloc. With the leave of the House I shall speak to Nos. 52, 56 to 58, 62, 65, 74, 74A, 79, 79A, B and C.

52 Page 11, line 22, leave out from beginning to 'a' in line 24 and insert—

  1. '(a) the survival of the company, and the whole or any part of its undertaking, as a going concern;
  2. (b) the approval under section (Decisions of meetings) above of a composition in satisfaction of the company's debts or a scheme of arrangement of its affairs;
    3. 1154
  3. (c) the sanctioning under section 425 of the 198 Act of a compromise or arrangement between the company and any such persons as are mentioned in that section; and
  4. (d) '.

56 Page 11. line 34. at end insert 'and to such other persons as may be prescribed; and

  1. (b) the petition shall not be withdrawn except with the leave of the court."

57 Page 11. line 35, leave out subsection (3) and insert— '(3) Where the court is satisfied that there is an administrative receiver of the company, the could shall dismiss the petition unless it is also satisfied eithcr—

  1. (a) that the person by whom or on whose behalf the receiver was appointed has consented to the making of the order; or
  2. (b) that, if an administration order were made,. any security by virtue of which the receiver was appointed would be liable to be released or discharged under section 84 below, would be avoided under section 87 below or would be challengeable under section 615A or 615B of the 1985 Act or under any rule of law in Scotland."

58 Page 12, line 12, at end insert— '(5) Without prejudice to the generality of subsection (4) above, an interim order under that subsection may restrict the exercise of any powers of the directors or of the company (whether by reference to the consent of the court or of a person qualified to act as an insolvency practitioner in relation to the company or otherwise).'

62 Page 12, line 27, at end insert— '(1A) Nothing in subsection (1) above shall require the leave of the court—

  1. (a) for the presentation of a petition for the winding up of the company;
  2. (b) for the appointment of an administrative receiver of the company; or
  3. (c) for the carrying out by such a receiver (whenever appointed) of any of his functions.
(1B) Where—
  1. (a) a petition for an administration order is presented at a time when there is an administrative receiver of the company; and
  2. (b) the person by or on whose behalf the receiver was appointed has not consented to the making of the order.
 the period mentioned in subsection (1) above shall be deemed not to begin unless and until that poison so consents.'

65 Clause 16, page 12, line 34, leave out from 'order to end of line 36 and insert—

  1. '(a) any petition for the winding up of the company shall be dismissed; and
  2. (b) any administrative receiver of the company shall vacate office.
(1A) Where an administration order has been made, any receiver of part of the company's property shall vacate office on being required to do so by the administrator.'

74 After Clause 18, insert the following new clause: 'Applications for discharge or variation of administration order. —(1) The administrator of a company may at any time apply to the court for the administration order to be discharged or to be varied so as to specify an additional purpose. (2) The administrator of a company shall make an application under this section if—

  1. (a) it appears to him that the purpose or each of the purposes specified in the order either has been achieved or is incapable of achievement;
  2. (b) he is required to do so by a meeting of the company's creditors summoned for the purpose in accordance with the rules.
(3) On the hearing of an application under this section, the court may by order discharge or vary the administration order and make such consequential provision as it thinks fit, or adjourn the hearing conditionally or unconditionally, or make an interim order or any other order it thinks fit. (4) Where the administration order is discharged or varied, the administrator shall, within fourteen days after the making of the order effecting the discharge or variation, send an office copy of that order to the registrar of companies. (5) If the administrator without reasonable excuse fails to comply with subsection (4) above, he shall be liable on summary conviction to a fine not exceeding one-fifth of the statutory maximum and, for continued contravention, to a daily default fine not exceeding one-fiftieth of the statutory maximum.'

74A Line 9, at end insert ("or")

79 Before clause 23, insert the following new clause: 'Information to be given by administrator .—(1) Where an administration order is made, the administrator shall—

  1. (a) forthwith send to the company and publish in the prescribed manner a notice of the order, and
  2. (b) within twenty-eight days after the making of the order, unless the court otherwise directs, send such a notice to all creditors of the company (so far as he is aware of their addresses).
(2) Where an administration order is made, the administrator shall also, within fourteen days after the making of the order, send an office copy of the order to the registrar of companies. (3) If the administrator without reasonable excuse fails to comply with this section, he shall be liable on summary conviction to a fine not exceeding one-fifth of the statutory maximum and, for continued contravention, to a daily default fine not exceeding one-fiftieth of the statutory maximum.'

79A Line 2, leave out ("is") and insert ("has been")

79B Line 10, leave out ("is") and insert ("has been")

79C Line 13, at end insert ("and to such other persons as may be prescribed")

These amendments follow further consideration of the comments made by your Lordships and consultation with practitioners and other interested parties since the Bill left this House, and a number of quite major changes have been made to the provisions dealing with the administrator procedure. The main aim has been to simplify the procedure and to reduce the need for frequent recourse to the court.

The first three of the amendments in this group are intended to make the court's task of assessing the desirability of making administration orders simpler as well as putting those with the power to block the making of the order in a better position to assess the aims of the administration. This is achieved by empowering the court to make an order specifying the purpose or purposes for which the administrator is to be appointed. The administrator then has a duty to manage the company with a view to achieving these purposes. Amendment No. 52 sets out the options available to the administrator. He may try to rehabilitate the company and may do this by putting together a scheme of arrangement under Section 425 of the Companies Act 1985 or an arrangement under the new composition procedures which I explained to your Lordships earlier. Alternatively he may attempt a more advantageous realisation of the company's assets than would be effected on a winding up and, if the court permits, may also achieve this by using Section 425 or the new composition procedure.

Amendment No. 57 amends the provisions which deal with those who may prevent the making of an administration order. The holder of a floating charge may block the making of an administration order by appointing an administrative receiver. If he does so, or if an administrative receiver is already in office when a petition for an administrator is presented, the court is required to dismiss the petition unless the person who appointed the administrative receiver had consented to the making of the administration order. However, the court may make an administration order without that consent if the security, under which an administrative receiver was appointed, was liable to be set aside under Clause 84 or Clause 87, or the equivalent Scottish provisions.

6.30 p.m.

In the case of a petition presented against a company where an administrative receiver has already been appointed, Amendment No. 62 prevents the moratorium from beginning until the consent of the chargeholder, who appointed the administrative receiver, has been obtained. This will ensure that there is no unnecessary interference with the affairs of the company in receivership where a petitioner fails to consult the appointing chargeholder before presenting the petition. The amendment also makes it clear that an administrative receiver may be appointed in the period between presentation and hearing of the petition and will enable him to exercise the powers conferred by the floating charge. It also makes it clear that it will be possible to present a petition for winding-up in the period prior to the making of an order.

The remaining amendments are mainly procedural. Amendment No. 56 is aimed at preventing the presentation of frivolous or mischievous petitions and will enable the rules to stipulate that the company shall be informed of the presentation of a petition. Amendment No. 65 requires the administrative receiver to vacate office on the making of an order and enables the administrator to dismiss a receiver if he considers it necessary for the conduct of the administration, although he may allow the administrator to remain in office to realise his appointor's assets where the asset is not essential to the purpose of the administration.

Since the administrator will be required to pursue the purposes stated in the order and will not be able to change purposes in mid-stream, as was originally envisaged, he will be required to seek a variation of the original order so that an additional purpose may be specified. Amendment No. 74 sets out these provisions as well as procedural provisions dealing with notification of discharge orders to the Registrar of Companies. Finally, there are the amendments in my name to Commons Amendments Nos. 74 and 79. These are technical amendments aimed at fine tuning of the provisions of the Bill relative to these matters. I beg to move.

Moved, That this House do agree with the Commons in their Amendments Nos. 48 and 49.—(Lord Lucas of Chilworth.)

On Question, Motion agreed to.