Enterprise Bill

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Mr. Alexander: I am taken by the points raised by the hon. Member for Twickenham, whose observations, especially on the two-day period, are reasonable. On that basis, I am prepared to reconsider amendments Nos. 578 and 409.

Mr. McWalter: I hope that my hon. Friend will not accept the Liberal Democrat amendment as drafted, which would create the abomination of a sentence that includes the word ''unless'' twice. It would also be ambiguous.

Mr. Alexander: I cannot give my hon. Friend the comfort that he is looking for; in the wee small hours of the morning, I did not notice that point. However, he anticipated what I was about to say, namely that I hope hon. Members will feel able to withdraw amendments Nos. 578 and 409 on the basis that we will reconsider those matters and ensure that, in terms of grammar and policy, our ambitions are reflected in the statute.

On amendments Nos. 531 and 410, I can offer less comfort. The reasoning behind the two-day notice period for the holders of prior floating charges is to make the notice requirements compatible with those for companies and their directors appointing administrators by the out-of-court route. A company or its directors must give five days notice to the floating charge-holders before appointing an administrator by the out-of-court route. During the notice period, we have provided that a floating charge-holder who is notified of the intentions of the company or its directors to appoint an administrator can choose to appoint a different administrator by an out-of-court route. In order to do that, a floating charge-holder will have to give notice to anyone who holds a prior floating charge. If the notice period were extended from two to five days, it would run beyond the notice period given by the company or its directors to the floating charge-holder. That would effectively make it impossible for the floating charge-holder to appoint an administrator by the out-of-court route in a case in which someone held a prior floating charge. That is

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why the notice period to holders of prior floating charges needs to be two rather than five days. On that basis, I ask the hon. Gentleman to consider withdrawing the amendment.

I also resist amendment No. 410. The intention behind the amendment was to allow a floating charge-holder to appoint an administrator by the out-of-court route in cases in which a provisional liquidator has been appointed on the company's own petition. However, provisional liquidators are appointed by the court and it would not be right for a floating charge-holder to be able to displace a court-appointed office holder without a court hearing. In such circumstances, it would be open to floating charge-holders to apply for administration through the court. I ask the hon. Gentleman to withdraw the amendment.

Dr. Cable: I will happily do so, given the Minister's assurances. I hope that that element of give and take and flexibility will pervade the rest of the discussion. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Dr. Cable: I beg to move amendment No. 579, in page 242, line 23, after 'file', insert

    'on the next day the court office is open'

The Chairman: With this it will be convenient to take amendment No. 513, in page 242, line 23, leave out 'with the court—' and insert

    'on the next day the court office is open—'.

Dr. Cable: This amendment is in the same spirit as the last. The legal eagles have spotted that courts, unlike Tesco stores, are not open for 24 hours a day, at weekends and on bank holidays. That might present a practical problem in cases in which the administration process needs to get under way immediately or in a short time. Whereas it is necessary to complete the formalities of filing once the courts have opened, that should not be a barrier to the process of negotiation that is part of administration. The purpose of the amendment is simple; it is to enable the process of administration to proceed immediately, whether there is a public holiday or it is 3 o'clock in the morning, so that the practical business of rescuing a going concern can proceed and the formalities that take place through the courts can take place at the slightly more casual pace at which the court system operates. I hope that the Minister will find that as easy to accept as the last amendment.

Mr. Alexander: I fear that I shall disappoint, given the spirit of the constructive engagement over the last series of amendments. However, I can offer some comfort to the hon. Gentleman. We are alive to the fact that arrangements for filing at court need to reflect the practical realities of which he spoke, including the requirement of creditors for a facility to deal with cases in which time is of the essence. I am considering with colleagues who have responsibility for courts and for courts administration including provisions for filing documents outside normal court opening hours where that is necessary. I would emphasise that, as an alternative, applicants needing to make out-of-hours

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appointments will be able to use the court route into administration. Procedures are already in place to enable such applications to be dealt with, given the time constraints that sometimes operate. I therefore ask the hon. Gentleman to withdraw the amendment.

Mr. Waterson: I rise only to say that it is curious that our amendment has exactly the same wording as that of the Liberal Democrats, and that I was going to endorse what the hon. Member for Twickenham said. I am delighted to hear what the Minister has to say. If there is another practical way of dealing with a perceived problem, nobody will be happier than I am.

Dr. Cable: In view of those comments, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Mr. Alexander: I beg to move amendment No. 488, in page 242, line 24, leave out 'in the prescribed form'.

The Chairman: With this it will be convenient to take Government amendment No. 489.

Mr. Alexander: These are simply tidying-up amendments to remove some unnecessary words. I assure my hon. Friend the Member for Hemel Hempstead that we are keen to ensure rigour and clarity wherever we can.

Paragraphs 16(1)(a) and 27(1)(a) both refer to filing notices ''in the prescribed form''. However, later in the same paragraphs, it is stated that notices must be ''in the prescribed form''. The amendments delete the first reference in each case and I hope that hon. Members will feel able to support the amendments.

Amendment agreed to.

Mr. Waterson: I beg to move amendment No. 532, in page 243, leave out lines 6 and 7.

The Chairman: With this it will be convenient to consider the following amendments:

No. 411, in page 243, leave out line 7 and insert—

    'the notice of appointment signed by or on behalf of the person appointing the administrator has been delivered to and accepted by the administrator'.

No. 533, in page 243, line 13, at end insert—

    '18A The appointment of an administrator under paragraph 12 takes effect when he is notified that the requirements of paragraph 16 are satisfied.'.

No. 534, in page 246, leave out lines 2 and 3.

No. 535, in page 246, line 9, at end insert—

    '30A The appointment of an administrator under paragraph 20 takes effect when he is notified that the requirements of paragraph 27 are satisfied.'.

11 am

Mr. Waterson: Amendments Nos. 532 and 411 deal with a largely technical issue. When an administrator is appointed by notice under hand, it is essential that he should be able to act immediately. Appointments can occur late at night, just before the weekend and occasionally just before public holidays. I suspect that, life being what it is, they almost invariably occur on

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those occasions. Certainly, when I was practising full-time as a maritime lawyer, ships were almost always arrested on a Friday afternoon, usually after one had had a rather satisfactory lunch.

Although there must be the public filing and notification obligations anticipated by paragraph 16, the appointment must be effective immediately to enable the administrator to act quickly and effectively. That is an extremely important point in practical terms. I should stress again that these questions are almost invariably raised by people who have to make the rules work in the real world. Waiting to hear that specific documents have been filed at court could cause damaging and wholly unnecessary delays, and a similar amendment should be made to clause 29.

Amendments Nos. 533, 534 and 535 are technical. They are designed to ensure that the administrator's appointment does not come into effect before he is aware of it, which I imagine would be helpful. I cannot imagine that anyone could reasonably argue against that, but the Minister may well try.

Mr. Alexander: I am happy, for the entertainment of the Committee, to be full of surprises. I shall try to explain the basis on which we will ask the Committee to resist the amendments.

The Bill provides that appointments of administrators by the out-of-court routes take effect when a notice of appointment has been filed with the court. The amendments are designed to change the point at which the appointment of the administrator takes effect. However, one of the effects of administration is to put a moratorium on court proceedings, so the court must be notified at the point when that moratorium commences; that is when the administrator is appointed. In addition, the court will provide an essential underpinning to the new administration procedure.

Although we are providing for administrators to be appointed without court hearings, which will save considerable time and expense, it is important that all administrators should be officers of the court, whether they are appointed by the court or the out-of-court routes. That will give the courts supervisory jurisdiction over administrators, which I hope the Committee would agree is important.

We recognise that arrangements for filing at court need to reflect practical realities—we have considered the issues raised around that matter—and the needs of creditors, including the facility to deal with cases where time is of the essence. With the help of officials with responsibility for courts elsewhere in the United Kingdom, I am considering the options, including provision for filing documents outside normal court opening hours when that is necessary.

As an alternative, applicants needing to make an out-of-hours appointment will be able to use the court route into administration. Procedures are already in place to enable such applications to be dealt with. The appointment actually takes effect when the papers, including a statement from the administrator that he or she is willing to act, are filed in court. It is important

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to concentrate on the key fact of when the supervisory jurisdiction kicks in. On that basis, I ask the Committee to oppose the amendments.

 
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