Moved by Lord Hodgson of Astley Abbotts
45: After Clause 17, insert the following new Clause—“Review of pre-pack transactionsIn Schedule B1 to the Insolvency Act 1986, after paragraph 74 insert—“Review of pre-pack transactions(1) The assets of a company may not be transferred under the terms of a pre-pack transaction unless the proposed purchaser has obtained an opinion in writing from a member of the pre-pack pool that the transaction is not unreasonable.(2) In this paragraph, a “pre-pack transaction” means a transaction which is negotiated before a company enters administration, and under which all or a substantial part of the company’s assets are sold to an associate on or shortly after the appointment of an administrator.(3) For the purposes of sub-paragraph (2), “associate” has the meaning given in section 435 of the Insolvency Act 1986.””Member’s explanatory statementThis new Clause requires a positive opinion to be obtained from a member of the pre-pack pool before a company enters into a pre-pack transaction. The pre-pack pool is an independent body of experienced business people set up in response to the recommendations of Teresa Graham’s report.
My Lords, I listened carefully to what my noble friend said a few minutes ago. He will not expect me to be delighted by it—it was very disappointing. Perhaps I may deal with the objections that he raised, as it is worth while to do so briefly.
My noble friend gave three reasons why the pre-pack pool should not be given the powers to control or regulate pre-pack transactions. The first was that, where the creditors wanted to go ahead, a transaction could be frustrated by a pre-pack pool member saying that it could not. His officials should get a life. The creditors are at the bottom of a waterfall and, if they say that they want it to go ahead, it should, although it will probably never happen in that way. Also, my amendment refers to the transaction not being “unreasonable”: it sets a very low bar.
Secondly, my noble friend said that the definition of “associate” was faulty. I have no pride in this. If he changed the definition of “associate”, I would accept that. He has the definition in his hands and can do with it what he wishes.
Thirdly, why did the Government set up a single pre-pack pool if they wanted only a single source of permissions? It was perfectly simple. It is worth noting that the pool is set up by professional bodies. When, a week ago, I said that there were conflicts of interest in the appointment of monitors, he said to me, “No, we don’t need to worry about that because it is run by professional bodies, and they will make sure that they have codes of conduct, which means that there will not be conflicts of interest. Therefore, I should not accept your amendment.” That applies just as much to the pre-pack pool, which is the product of a series of highly respected professional bodies.
My noble friend also said—I was delighted to hear this—that those running the Pension Protection Fund have said that there had been no trouble with pre-packs. Long may that last.
My noble friend also said that a review would be available this summer. However, we do not need a review; we need somebody in charge to do something while we come out of a pandemic. That is the whole purpose of my amendment. We are not looking for a review; we are looking for something better than the pre-pack pool to be put in place. To be fair to the Government and to my noble friend, the chances of the Government being able to find the time to produce this important but small reform with everything else that is going on are vanishingly small. Therefore, we will be living with the situation where pre-packs are unregulated post the collapse of the pre-pack pool.
To come to the point, I want to keep the pre-pack pool in existence, and that is what my amendment is about. It is not about politics; it is about good business practice. It is about fairness and about helping the deserving case and stopping the crooked one. It is about protecting firms and suppliers from being ripped off, and it is about assisting the Pension Protection Fund.
I was very sad to hear the noble Lord, Lord Stevenson, whom I have always found to be a man of discerning judgment, speaking on behalf of the Labour Party and saying that he could not support the amendment. Instead, he is creeping away from the sound of the battle and covering himself with the fig-leaf that somehow we should not endow non-statutory bodies with statutory powers. If that is a big constitutional point, we might have heard about it when he spoke about this at earlier stages of the Bill.
In conclusion, those who read their Damon Runyon will be familiar with a character called Harry the Horse, whose catchphrase was, “Put up or shut up”. After 15 years on this subject, during which we have had no real action from the Government, the time has come for those of us who believe that fairness is what we should be aiming for to “put up”. I beg leave to test the opinion of the House.
Ayes 155, Noes 326.