|Draft Insolvency Act 1986 (Amendment) (No.3) Regulations
Mr. Wilson: Clearly, the aim of the regulations is to avoid an abuse of a well-intentioned system designed specifically to benefit small companies. If anyone tries to exploit it or create loopholes, which is not currently a problem, there would be close monitoring and appropriate safeguards would be introduced. A problem has not been identified, but my hon. Friend has again made a useful point about abuse against which, in different circumstances, we would have to safeguard.
The hon. Member for Eastbourne asked about the definition of agreement, as mentioned in proposed new paragraph 4C. The agreement is not defined, so the exception is flexible, although we would expect an agreement often to concern a securitisation or similar transaction.
Mr. Waterson: Is it not confusing to leave that definition so open? Can it refer to an agreement with suppliers or customers in the ordinary way of trading, or must it relate to finance or capital? Surely it must be more closely defined.
Mr. Wilson: I think that the term ''agreement'' has a certain status, but I shall be happy to write to the hon. Gentleman on any more specific definition that might be useful to him, and on any other point that I do not cover in my winding-up speech.
I should point out that the regulations restrict the ability of certain companies to obtain a moratorium. We have made those changes because the interested parties need them to be able to continue to do such deals. Again, that refers to the point made by my hon. Friend the Member for Hemel Hempstead (Mr. McWalter). The regulations are not correcting abuse by companies that are seeking to gain advantage of the terms. We are dealing with companies or entities that are almost inadvertent beneficiaries of the legislation. We are not talking about evasion, but a well-intentioned measure, which has been so well intentioned that it includes people who could be damaged by it. Therefore, we have had to introduce clarification for their benefit.
It is also important to remember that the Enterprise Bill and the Insolvency Act 2000 cover different territory, so comparisons between the two are not necessarily helpful. I re-emphasise that the company voluntary arrangement moratorium is aimed at small companies.
I was asked by the hon. Member for Eastbourne to clarify whether a nominee must be qualified. That is straightforward: any nominee at present must be an insolvency practitioner, and anyone else who acts in that capacity will commit an offence. I was also asked to consider amending the initial 28-day period. It has been a matter of consultation and balance, and we believe that the period is appropriate.
The regulations provide a sensible means of preventing particular types of company that cannot properly be called, and do not want to be called, small companies from using the new company voluntary
Column Number: 015arrangement moratorium procedure. We intended that the procedure would help small companies, which is exactly what will happen as soon as the regulations are made. They will enable us to introduce the necessary provisions quickly. Consistent with the concerns of the hon. Member for Hertford and Stortford about the time scale of the process, if the regulations are passed, we can get on with the rest of the process.
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The Committee divided: Ayes 8, Noes 4.
Division No. 1]
Committee rose at twenty-one minutes past Five o'clock.
The following Members attended the Committee:
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