Insolvency Rules: Judgment Implications (Hansard, 16 June 1994)

§ Lord Strathclyde
My Lords, the implications of the judgment are being carefully considered and the relevant rules will be amended if appropriate to do so.

Lord Bruce of Donington
My Lords, I am most grateful to the Minister for his Answer. However, is he aware that the provisions of Rule 5.17(3) of the Insolvency Rules 1986, together with a similar rule, Rule 1.17(3), which deals with companies, play an integral part in procedural terms of activating those provisions of the Insolvency Act 1985 which provide for voluntary agreèments between companies and their creditors for the purposes of reconstruction? Is the Minister also aware that those arrangements have proved very beneficial to many companies, individual firms and partnerships in the United Kingdom in effecting successful reconstructions where, otherwise, such businesses might have gone into liquidation or bankruptcy?
Is the Minister further aware that the judgment in the case in question goes completely contrary to what has become accepted practice over the past eight years, where the insolvency practitioner, as the chairman of the creditors' meeting, has been given very wide powers to determine the value of unascertained liabilities and unsatisfied but unqualified claims presented at any time prior to midday on the day previous to the creditors' meeting? The taking away of that particular discretion is a grave matter; indeed, it threatens the whole base of the application of the voluntary arrangements envisaged in the Insolvency Act 1985.

§ Lord Strathclyde
My Lords, I can confirm to the noble Lord that I am well aware that that has been the practice of insolvency practitioners over the course of the past few years and, indeed, that it is an integral part of their operation. Further, I should add that CVAs— that is, company voluntary arrangements—are schemes that we are anxious to do what we can to encourage. However, we need to find a fair and workable solution as a result of the judgment.

§ Lord Peston
My Lords, I believe that the House will be most indebted to my noble friend Lord Bruce of Donington for placing the matter before us. When his officials advise him on the whole interpretation of the decision, will the Minister bear in mind the fact that were he to bring forward an immediate or, in this case, a quick amendment to Rule 5.17(3) of the Insolvency Rules, he would have the full support of the Opposition? Assuming that the whole process works by having to be voted on—which I am not even sure is the case—I do not believe that there will be any problem in getting the matter through. We would support very quick action if the Minister were minded to act.

§ Lord Strathclyde
My Lords, I am delighted to have the Opposition's support on the matter. As the noble Lord recognises, it is of some importance. That is why we are considering the matter urgently. However, we need to discuss it with the profession. If a rule change is necessary, we shall have to consult with the Statutory Rules Committee, because the impact of the judgment on meetings and all types of insolvencies will need to be considered. As soon as we have a reply, we shall come very quickly to a decision.

Lord Bruce of Donington
My Lords, I am most grateful to the Minister. However, is he aware that, with the limited experience that I have in the field, I am available to offer my services in determining a correct substitute for the present rule?

§ Lord Strathclyde
My Lords, I believe that the noble Lord is being overly modest as both his experience and knowledge in the field are very highly regarded in all parts of the House and, indeed, outside.