HL Deb 09 November 1989 vol 512 cc1065-7

248 Clause 142, page 143, leave out line 31 and insert 'in this Part "market charge" means a charge'.

249 Page 143, leave out line 44.

250 Page 144, line 2, leave out from `purposes' to end of line 4 and insert `it is a "market charge" so far as it has effect for the specified purposes.'.

251 Page 144, line 14, leave out 'sections 143 and 144' and insert 'this Part'.

252 Page 144, line 15, at end insert — '(4A) The regulations may provide that a charge shall or shall not be treated as a market charge if or to the extent that it secures obligations of a specified description, is a charge over property of a specified description or contains provisions of a specified description.'.

253 Page 144, line 16, leave out subsection (5) and insert —'(5) '(5) Before making regulations under this section in relation to charges granted in favour of a person within subsection (1)(c), the Secretary of State shall consult the Treasury and the Bank of England.'.

254 Clause 143, page 144, line 35, leave out subsection (5) and insert— '(5) Before making regulations under this section in relation to charges granted in favour of a person within section 142 (1)(c), the Secretary of State shall consult the Treasury and the Bank of England.'.

255 Clause 144, page 144, line 39, leave out subsections (1) to (3) and insert — '(1) The following provisions of the Insolvency Act 1986 (which relate to administration orders and administrators) do not apply in relation to a market charge—

  1. (a) sections 10(1)(b) and 11(3)(b) (restrictions on enforcement of security while petition for administration order pending or order in force), and
  2. (b) section 15(1) and (2) (power of administrator to deal with charged property);
and section 11(2) of that Act (receiver to vacate office when so required by administrator) does not apply to a receiver appointed under a market charge.

(2) However, where a market charge falls to be enforced after an administration order has been made or a petition for an administration order has been presented, and there exists another charge over some or all of the same property ranking in priority to or pari passuwith the market charge, the court may order that there shall be taken after enforcement of the market charge such steps as the court may direct for the purpose of ensuring that the chargee under the other charge is not prejudiced by the enforcement of the market charge.

(3) The following provisions of the Insolvency Act 1986 (which relate to the powers of receivers) do not apply in relation to a market charge —

  1. (a) section 43 (power of administrative receiver to dispose of charged property), and
  2. (b) section 61 (power of receiver in Scotland to dispose of an interest in property).'.

256 Page 145, line 1, leave out subsections (4) and (5) and insert— '(4) Sections 127 and 284 of the Insolvency Act 1986 (avoidance of property dispositions effected after commencement of winding up or presentation of bankruptcy petition), and section 32(8) of the Bankruptcy (Scotland) Act 1985 (effect of dealing with debtor relating to estate vested in permanent trustee), do not apply to a disposition of property as a result of which the property becomes subject to a market charge or any transaction pursuant to which that disposition is made. (5) However, if a person (other than the chargee under the market charge) who is party to a disposition mentioned in subsection (4) has notice at the time of the disposition that a petition has been presented for the winding up or bankruptcy or sequestration of the estate of the party making the disposition, the value of any profit to him arising from the disposition is recoverable from him by the relevant office-holder unless the court directs otherwise.'.

257 Page 145, line 17, after 'preferential', insert 'or, in Scotland, preferred'.

258 Page 145, line 17, at end insert —' '(7) In a case falling within both subsection (4) above (as a disposition of property as a result of which the property becomes subject to a market charge) and section 135(2) (as the provision of margin in relation to a market contract), section 135(3) applies with respect to the recovery of the amount or value of the margin and subsection (5) above does not apply.'.

259 Clause 145, page 145, line 23, leave out subsection (2) and insert — '(2) The regulations may specify any description of charge granted in favour of—

  1. (a) a body approved under section 140 (certain overseas exchanges and clearing houses),
  2. (b) a person included in the list maintained by the Bank of England for the purposes of section (Certain money market institutions) (certain money market institutions),
  3. (c) the Bank of England,
  4. (d) an authorised person within the meaning of the Financial Services Act 1986, or
  5. (e) an international securities self-regulating organisation within the meaning of that Act,
for the purpose of securing debts or liabilities arising in connection with or as a result of the settlement of contracts or the transfer of assets, rights or interests on a financial market. (2A) The regulations may specify any description of charge granted for that purpose in favour of any other person in connection with exchange facilities or clearing services provided by a recognised investment exchange or recognised clearing house or by any such body, person, authority or organisation as is mentioned: n subsection (2). (2B) Where a charge is granted partly for the purpose specified in subsection (2) and partly for other purposes, the power conferred by this section is exercisable in relation to the charge so far as it has effect for that purpose.'.

260 Page 145, line 43, leave out subsections (4) and (5) and insert— '(4) Before making regulations under this section relating to a description of charges defined by reference to their being granted —

  1. (a) in favour of a person included in the list maintained by the Bank of England for the purposes of section (Certain money market institutions), Or in connection with exchange facilities or clearing services provided by a person included in that list, or
  2. (b) in favour of the Bank of England, or in connection
wih settlement arrangements provided by the Bank, the Secretary of State shall consult the Treasury and the Bank of England. (5) Regulations under this section may provide that they apply or do not apply to a charge if or to the extent that it secures obligations of a specified description, is a charge over property of a specified description or contains provisions of a specified description.'.

Lord Fraser of Carmyllie

My Lords, I beg to move that the House do agree with the Commons in their Amendments Nos. 248 to 260. These amendments are mainly concerned with tidying up the provisions on the market charges, in particular the working of the regulation-making power in Clause 142 which will be used to specify in detail the extent to which a charge is to be regarded as a market charge for the purposes of this part. Provision is also made to permit the interests of a prior chargee to be safeguarded in the event that the market charge is enforced during an administration.

Moved, That the House do agree with the Commons in the said amendments.—(Lord Fraser of Carmyllie.)

Lord Williams of Elvel

My Lords, I have no objection to the wording of the Commons amendments. I just wish to place on the record yet again that we do not believe in the concept of market charges. We do not believe that it will work. Our advisers do not believe that it will work, and we believe that this is a false concept in insolvency law.

On Question, Motion agreed to.