§ WINDING UP AND ADMINISTRATION ORDERS
§ Power to petition for winding up orders.
§ The noble Lord said: In moving Amendment No. 184, it might be for the convenience of the Committee if I speak also, as briefly as I can, to Amendments Nos. 248 and 259. The new clause enables the Secretary of State or the designated agency to petition the court for the winding up of an authorised person which is a company or partnership. The court may wind up the authorised person if it cannot pay its debts or if the court considers that it is just and equitable to do so. This power is based on a similar provision in the Banking Act.
§ The Companies Act has long conferred a power on the Secretary of State to petition for the winding-up of a company, and experience has shown how useful such a power can be, and it seems right to give a similar power to the Secretary of State and designated agency in the financial services sector.
§ Such a power would not be used lightly. But there may be occasions when information about a business, perhaps uncovered in the course of an investigation, reveals so sorry a state of affairs—perhaps involving fraud or other unlawful conduct—that the winding-up of the business provides the speediest and most effective means of preventing further abuse and ensuring as fair a disposal of the available assets as is possible in the circumstances. The involvement of the court in judging whether the petition is warranted ensures that such a power cannot be misused. I commend the provision to the Committee, and I beg to move.
§ Lord Williams of Elvel
We shall have to look at this because it raises some important issues, but I do not want at this stage to discuss them. We shall not oppose the amendments. We shall look at it and come back on Report if we feel it necessary.
§ On Question, amendment agreed to.
Lord Lucas of Chilworth moved Amendment No. 185:
Insert the following new clause—
§ ("Power to petition for administration orders.
.A petition may be presented under section 9 of the Insolvency Act 1986 (applications for administration orders) in relation to a
company to which section 8 of that Act applies which is an authorised person (including a person whose authorisation has been suspended) or an appointed representative—
§ The noble Lord said: Amendment No. 185 inserts a new clause relative to the power to petition for administration orders. This provision enables a regulator, be it an agency, SRO, or RPB, to petition a court for appointment of an administrator under the Insolvency Act to take over the affairs of an authorised business which is a company. At present, such a petition may be presented only by a creditor or by the company or its directors. The court will have to be satisfied that the criteria set out in the Insolvency Act for the appointment of an administrator are fulfilled before it grants such an application. So it would be the court that would have to judge whether the company is, or is likely to become, unable to pay its debts; that the appointment of an administrator will lead to the survival of the company as a going concern; that it will lead to a more advantageous realisation of assets or that other of the criteria in Section 27 of the Insolvency Act will be satisfied.
§ The administrator will be subject to the provisions of the Insolvency Act in the course of his adminis-tration. This adjustment to the existing provisions of insolvency law acknowledges that regulators will often be well placed from their knowledge of the business and through the information obtained in the course of monitoring its compliance with their rules. They will be well placed to judge when a business is becoming insolvent and when a change of management will have a particularly remedial effect.
§ The appointment of an administrator will give a company a breathing space in which solutions to its problems may be found. This may often be in the interests of both its creditors and its investors. We believe that this is a useful power that should on occasion help to rehabilitate investment businesses that have run into difficulties. I commend this amendment to the Committee, and I beg to move.
§ On Question, amendment agreed to.
§ Moved accordingly, and, on Question, Motion agreed to.
§ House resumed.