Only a few days to go: We’re raising £25,000 to keep TheyWorkForYou running and make sure people across the UK can hold their elected representatives to account.

Donate to our crowdfunder

Clause 132

Part of Banking Bill – in a Public Bill Committee at 11:00 am on 18th November 2008.

Alert me about debates like this

Photo of Ian Pearson Ian Pearson Parliamentary Under-Secretary (Economic and Business), Department for Business, Enterprise & Regulatory Reform, Economic Secretary (Economic and Business), HM Treasury 11:00 am, 18th November 2008

Amendment No. 179 would remove the ability of a bank administrator to disclaim onerous property. I shall set out why that ability is important and why we disagree with the amendment.

Onerous property includes unprofitable contracts and property that is unsaleable or not easily saleable, or that might give rise to a continuing liability. The ability to disclaim onerous property is a useful tool for the benefit of creditors, but it is normally available—as the hon. Gentleman says—only to a liquidator. We have applied the provision to bank administration, with some modifications, as giving the bank administrator that power will help to achieve the best result for creditors. Many members of the insolvency community, including practitioners and lawyers, think that an ordinary administrator should also be able to disclaim onerous property, so it is sensible to apply such a provision, which benefits creditors, to the bank administration procedure.

The modifications in clause 132 are in line with the application of other powers that are normally available only to a liquidator, for example the ability to bring an action before the court for fraudulent or wrongful trading and to pay dividends to unsecured creditors without requiring permission from the court. Such provisions will ensure that a bank administrator has all the powers necessary to fulfil his or her objectives. The application of the liquidation powers, including the power to disclaim, will also help to ensure that the bank administration procedure is a cost-effective and efficient stand-alone regime, which operates in the best interests of creditors.

I thank the hon. Gentleman for his amendment because it has enabled us to look at why table 2 applies only to section 178 of the 1986 Act, and not the following four sections, which also deal with disclaimers. He has brought that point to our attention and we will look into it. If technical amendments are required to apply further provisions of the 1986 Act relating to the operation of disclaimers, we will consider how to deal with them. Any necessary amendments will, of course, be subject to normal scrutiny. I urge the hon. Gentleman to withdraw his amendment because it is sensible that bank administrators have that power, but we will look at whether we need to address in due course the issues raised by the amendment.