HL Deb 23 October 1985 vol 467 cc1225-7

190 Clause 68, page 51, leave out lines 27 to 38 and insert—

  1. '(a) make out a statement in the prescribed form as to the affairs of the company;'.

191 Page 51, line 39, leave out 'and that list'.

192 Page 51, line 43, at end insert— '(4A) The statement as to the affairs of the company shall be verified by affidavit by some or all of the directors of the company and shall show—

  1. (a) particulars of the company's assets, debts and liabilities;
  2. (b) the names and addresses of the company's creditors;
  3. (c) the securities held by them respectively;
  4. id) the dates when the securities were respectively given; and
  5. (e) such further or other information as may be prescribed.'.

193 Page 52, line 4, leave out '(4)(c)' and insert '(3)(b)'.

194 Page 52, line 17, after '(2)' insert 'or (3)'.

195 Page 52, line 19, after '(4)' insert 'or (4A)'.

196 Page 52, line 21, leave out 'that subsection' and insert 'subsection (4) above'.

Lord Lucas of Chilworth

My Lords, I beg to move that this House do agree with the Commons in their Amendments Nos. 173 to 188, 189 (as amended by my Amendment No. 189A) and 190 to 196.

At the same time, I would ask your Lordships' permission to speak to Amendments Nos. 465 to 469, 471, 519, 546, 547 and 553.

465 Schedule 5. page 179, line 42, at end insert— '29A. In section 584(1) (general company meeting at each year's end), for the words "section 586" there shall be substituted the words "section 66(6) of the Insolvency Act 1985".'.

466 Page 180, line 1, leave out from beginning to 'there' in line 2 and insert—

  1. '(1) Section 590 (appointment of committee of inspection) shall be amended as follows.
  2. (2) For subsection (1)'.

467 Page 180, line 7, at end insert—

  1. '(3) In subsection (3), for the words "committee of inspection" there shall be substituted the words "committee established under this section".
  2. (4) In subsection (5), for the words "committees of inspection there shall be substituted the words "such committees".'.

468 Page 180, line 10, leave out '58 or 59 of the Insolvency Act 1985' and insert '590'.

469 Page 180, line 14, leave out '58 or 59 of the Insolvency Act 1985' and insert '590'.

471 Page 180, line 18, leave out '58 or 59 of the Insolvency Act 1985' and insert '590'.

519 Schedule 7, page 193, line 36, leave out from '(corporate),' to end of line 39 and insert 'after paragraph (b) there shall be inserted the words "or

  1. (c) on the holding of a creditors' meeting summoned under section 66 of the Insolvency Act 1985 (effect of insolvency on members' voluntary winding up);".'.

546 Schedule 9, page 203, line 30, column 3, at end insert 'Section 586'.

547 Page 203, line 33, column 3, at end insert Section 589(5)'.

553 Page 204, line 27, column 3, at end insert '583(2), 588(5)'.

All these, amendments are concerned with improving the practical effectiveness of the provisions of the Bill relating to a voluntary wind-up. Clauses 66 to 68 strengthen the existing legislation in this area of corporate insolvency and close the loopholes which currently exist and which are used by what in our discussions on this Bill we have come to call the cowboy directors and the rogue liquidators to the disadvantage of the general body of creditors. It should permit the exponent of the phoenix syndrome to operate with considerable effect.

9.45 p.m.

Your Lordships are aware that there is no direct official involvement in a voluntary liquidation, the matter being a private one between the company, the creditors and the practitioner concerned. Therefore, it is natural that practitioners should have considered in depth the practicalities involved in the operation of these clauses. Detailed comment was in fact received from many practitioners in England and Wales, and also in Scotland. Whilst appreciating and having approval of the underlying intentions behind the clauses, they made several detailed suggestions on the amendments with a view to ensuring that the provisions would operate effectively in practice

In the light of their comments, we reconsidered Clauses 66 to 68 and introduced these amendments in the other place in the confidence that they would both improve the effectiveness of the provisions while at the same time maintaining the level of protection and degree of information that we wished to give to creditors. Commons Amendment No. 189 ensured that on receipt of notice of a meeting of creditors to wind up a company voluntarily creditors could either obtain information about the company from a recognised insolvency practitioner or, alternatively, could inspect the list of the company's creditors. This assists creditors in preventing unscrupulous directors from ensuring the appointment of a liquidator of their own choice. Representations have been made that directors could defeat the purpose of paragraph (h) by stating in the notice the two days immediately after the date on which the notices are sent out. In view of the time necessary to receive notices through the post, creditors often would not receive sufficient notice to enable them to inspect the list.

Amendment No. 189A overcomes this problem by stating that the notice, which must be sent out at least seven days before the meeting of creditors, is to state where the list of creditors may be inspected during the two business days falling next before the date of the meeting. I repeat that I would be happy to go into any detail noble Lords might wish with regard to the other amendments in this package to which I have not directly referred, but I commend this package of amendments from another place to your Lordships.

Moved, That this House do agree with the Commons in their Amendments Nos. 173 to 196, as amended by Amendment No. 189A—(Lord Lucas of Chilworth.)

On Question, Motion agreed to.