Enterprise Bill

Part of the debate – in the House of Lords at 5:15 pm on 21 October 2002.

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Photo of Lord Hunt of Wirral Lord Hunt of Wirral Conservative 5:15, 21 October 2002

My Lords, I am grateful to the Minister for the work that his officials have done over the past few days to try to resolve a number of issues. People have worked exceedingly hard and a series of meetings have been held. However, these concerns were expressed when the legislation was debated in the other place over some considerable time. I accept criticism all the time but I hope that on reflection the Minister will not criticise me as severely as he just has for not yet having adapted to amendments that were tabled only last week. It has taken a little time to assimilate all the hyper activity that has occurred over the past few days and weeks.

I refer, first, to Amendment No. 206, which the Minister has just moved and which states:

"The administrator of a company must perform his functions as quickly and efficiently as is reasonably practicable".

Who could possibly oppose the amendment? Its purpose is recognised and is laudable. However, I am advised by the many legal brains who have focused on it that its actual wording imposes something of an impossibly high standard in that every administrator must always, every minute of every day and every day of every week and month, perform with the greatest reasonably practicable speed and efficiency. It is suggested that he should be required to perform with such speed and efficiency as would be expected of a reasonably competent insolvency practitioner in the circumstances of the particular case.

In addition, that standard of performance should be subject to the fundamental duty of the administrator to act in the interests of the company's creditors as a whole as cases may occur where quick action may not lead to the best outcome for creditors. We have already dealt with the consequences of some of the legal phraseology in the notable and effective contribution of the noble and learned Lord, Lord Hoffmann.

All ER (D) 393 (Jul). All I would say to the Minister is that any legislation which he now proposes will be held, in my belief, alongside that very clear judgment. Mr Justice Neuberger said:

"As a matter of ordinary statutory interpretation, s 108 of the 1986 Act gave the court discretion as to whether or not to remove a liquidator. In such cases, the court might have to carry out a balancing exercise. On one hand, it would expect any liquidator to be efficient, vigorous and unbiased in his conduct of the liquidation, and should have no hesitation in removing him if it was satisfied that he did not live up to expectations. On the other hand, if the liquidator was honest, the court should think carefully before removing him, and it was not enough to say that his conduct had fallen short of ideal, as that would encourage disgruntled creditors to make such applications when their agent was not appointed a liquidator".

I believe that the Minister will appreciate that that is a clear statement of the circumstances in which the court would use its existing power to remove the practitioner.

I hope that between now and next Monday the Minister will give some thought to whether the wording of Amendment No. 206 does not impose an impossibly high standard and may also conflict with existing judicial directives and ratio decidendi on that particular aspect.

I am very grateful to the Minister, as I said previously, for proposing the time limits in the government amendments; they are welcomed and broadly acceptable. However, he referred to Amendments Nos. 211 and 216. Amendment No. 211 would leave out "28 days" and insert "three months" and Amendment No. 216 would leave out "six weeks" and insert "four months". I realise that the purpose of these amendments is to set realistic and achievable targets. I am grateful to the Minister for having said that he will provide limits that will command a wider consensus and for the extent of the consultations. It might be helpful if he reminded the House of the details of those consultations; I believe that a number of parties may not have been consulted during the time available.

Amendment No. 227 would leave out paragraphs 76 to 78. As the Minister knows, we should have preferred there to be no time limit relating to administrations. In relation to complicated administrations, in many cases one year would be far too short. In the time available, I have not yet been able to consult the practitioners sufficiently on the end time limits, but I should like to do so. I realise—such is the situation in this Session—that that means before next Monday; however, I hope that the Minister will allow me sufficient time to consult on the final backstop time limit. I am very grateful to him and his colleagues for having advanced a more realistic approach to the time limits following consultation.