Company Liquidations

Oral Answers to Questions — Trade and Industry – in the House of Commons at 12:00 am on 10th February 1988.

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Photo of Mr Ronald Brown Mr Ronald Brown , Edinburgh Leith 12:00 am, 10th February 1988

To ask the Chancellor of the Duchy of Lancaster how many companies went into liquidation during 1987; and if he will make a statement.

Photo of Francis Maude Francis Maude Parliamentary Under-Secretary (Department of Trade and Industry)

The number of company insolvencies in Great Britain in 1987 was 11,645—about 22 per cent. less than in 1986.

Photo of Mr Ronald Brown Mr Ronald Brown , Edinburgh Leith

Is the Minister aware that some companies deliberately go bust in order to renege on their commitments to staff, customers and creditors in general? For example, does he know that Glendevon Carpets in my constituency did that not so long ago and that many people suffered? Indeed, the company went out of business and resurrected itself elsewhere under a different name. The people behind that move got off scot free—I do not mean that as a pun, because the matter is too serious. Do the Government have any ideas or proposals that may deal with that problem?

Photo of Francis Maude Francis Maude Parliamentary Under-Secretary (Department of Trade and Industry)

The phenomenon to which the hon. Gentleman referred is well understand and, regrettably, does happen. It was addressed in the Insolvency Act 1985, which gives courts the right to disqualify directors if they are found to have been guilty of misconduct such as that.

About 64 directors have been disqualified in the past few months since the new regime came into force, and about 120 further applications are being made by my Department to the High Court for further disqualifications. I hope the hon. Gentleman is satisfied that it is a problem which we take seriously and have already addressed.

Photo of Andrew Mitchell Andrew Mitchell , Gedling

Does my hon. Friend agree that it is not so much liquidations as new business start-ups that are the important figures? Does he agree that new business start-ups under the Government have been—

Photo of Mr Bernard Weatherill Mr Bernard Weatherill , Croydon North East

Order. The question is about liquidations.

Photo of Mrs Elaine Kellett Mrs Elaine Kellett , Lancaster

I have a question about that.