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The point I would like to make about this clause is similar to one that my hon. Friend the Member for Fareham made about bank insolvency or liquidation. I know there was a debate about the terminology. My point relates to the credit institutions reorganisation and winding up directive 2001 and the 2004 regulations that enforced it. The purpose of that directive and those regulations is to have some mutual recognition arrangement within the European economic area for winding-up proceedings.
A concern has been raised with us that the arrangements for bank administration feel more like regulatory arrangements than insolvency arrangements, particularly because objective 1 takes priority over objective 2. Objective 1 is support for a commercial purchaser of a bridge bank, so I seek reassurance from the Minister that in those circumstances, as far as the Government are concerned, those arrangements will be recognised under the directive, creditors will be treated equally, we will not run into difficulties and essentially those arrangements will not be recognised in other jurisdictions. That means that for assets held in other jurisdictions we will have two separate sets of insolvency proceedings or administration proceedings, so the whole process will become rather confused and dragged out and there will be an issue concerning what happens to assets held in other jurisdictions within the EEA.
Will the Minister also mention the normal administration objective 2, which is subservientto use the Treasury languageto objective 1? Does that mean that shareholders in a bank that is in administration will be in a worse position than those in a company that is in normal administration because we have objective 1? We are broadly supportive of clause 124, but it might be helpful if he could outline that to the Committee and address those points.
The clause provides that the bank administrator has specific statutory objectives, the first being the provision of support for the bridge bank or private sector purchaser. Once such support is no longer required, the objective is to achieve either of the two principal aims of an ordinary administration: either to rescue the company as a going concern or to achieve a better result for creditors in an immediate liquidation.
I can confirm to the hon. Gentleman that the bank administration procedure will fall within the scope of the directive he mentioned as a reorganisation measure, and shareholders in the administration will be in the same position in the bank administration procedure as in a normal administration procedure, so there is no intention to do anything differently. I remind him about clause 55 and the no creditor worse off position outlined in the Bill. We believe that there are proper safeguards, and those in the industry, whom we will continue to talk to, are broadly satisfied with what we are trying to achieve.