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Baroness Buscombe: I thank the Minister for his response but ask him to clarify a point that I may not have quite right. Is he saying that I am wrong in suggesting that an authorised person is licensed only to handle a voluntary arrangement?
Baroness Buscombe: In which case, is he therefore not able to suggest other routes which might in fact be more beneficial to the person who has gone to him? I made the point about the small man who is in debt but would actually be better off going bankrupt than having a voluntary arrangement.
Lord McIntosh of Haringey: He can do that, of course, and he can give the advice. However, the successful outcome of a moratoriumthat is what a moratorium is foris a way in which the business carries on trading with the agreement of its creditors. The form that takes, whether it is a formal, voluntary arrangement, is open. A failure of a moratorium, however, is where the business goes bust and the creditors decide they would rather the business go bust than that it should be allowed to continue. That must, however, be their judgment and the nominee or supervisor is there to seek to achieve the continuation of the business.
Baroness Buscombe: I thank the Minister for his response. I am still unhappy with regard to the point we have made; namely, that whatever the circumstances the authorised person is almost bound to recommend a voluntary arrangement even where other procedures might be more appropriate. Indeed, in a sense I am saying that it is much less expensive. I agree with the noble Lord, Lord Sharman, that directors of the company are not likely to go to an authorised person. I thank him for his support.
However, I return to my example of the individual, the small man, who is in debt without any assets, and take up the point made by the noble Earl, Lord Sandwich. He is unlikely really to know who he is going to. The point made by the noble Earl, Lord Sandwich, is very important in that there is some confusion as to the role, and indeed the credibility, of these new authorised persons. They are not just acting as insolvency practitioners but, in a sense, holding themselves out as insolvency practitioners.
Lord McIntosh of Haringey: I think I understand the difficulty we are having. The point being made by the noble Baroness, Lady Buscombe, is about pre-moratorium advice: in other words, whether or not we should go into a moratorium. I now understand and I am sorry to have been slow on the uptake. Neither the power under Section 391, which is the insolvency practitioner power, nor the power under Clause 4, purports to regulate the provision of advice to a company or a debtor that is in financial difficulty. That is not restricted to an insolvency practitioner or an authorised person, or anybody.
Companies or debtors seek advice from the people they consider most suited to give it. That could be their auditors, their bank managers, their brothers-in-law, or whoever it might be. What we are doing is nothing to do with advice before considering whether or not to go to a moratorium. We are looking at the qualifications for being a nominee or supervisor.
Baroness Buscombe: We made this point because an authorised person is only able to handle a voluntary arrangement; he is almost liable to recommend a voluntary arrangement. This may be cynical, but it will happen in practice because that is the only way he is going to get paid.
Lord McIntosh of Haringey: He gets paid as a nominee also, but as a supervisor, of course. If the phrase "voluntary arrangement" is being used as an alternative to "moratorium", anyone can advise on whether a moratorium is a good idea, and both creditors and the company have to agree to itI stress "anyone", not merely an authorised person or insolvency practitioner. The nominee comes in when a decision has been taken in principle to go for a moratorium and he is paid as the nominee or the supervisor of the moratorium.
I should like to return briefly to the points made by the noble Earl, Lord Sandwich, in regard to naming the authorised persons. It is important, particularly in relation to the "small guy" who is in difficulty and who needs help, that he should understand clearly, up front, whom he is approaching and what advice they are able to give. I thank the Minister. We shall read with care all that has been said and we may return to this point at Report stage. I beg leave to withdraw the amendment.
Baroness Buscombe: Under the Bill as drafted, the meeting can resolve to extend the moratorium. However, the wording does not necessarily have that effect. It is a question of semantics. We do not question the purpose of the clause; both amendments merely propose a drafting point. A meeting can resolve itself to do anything, but that does not necessarily mean that it gives effect to that resolution. We believe that the wording should be the other way round: that the moratorium should be extended if the committee so resolves. The same is true of Amendment No. 39, which states that,
Lord McIntosh of Haringey: I am glad that the noble Baroness, Lady Buscombe, has taken these two amendments together, because I can give the same happy reassurance on both of them. We are convincedand we have taken further legal advice on the matterthat the amendments do not change the substance of paragraph 30(1) or paragraph 33(1) in any way. Amendment No. 37 merely re-states the content of paragraph 30(1) in different terms. The meaning of paragraph 30(1) is perfectly clear. It provides that where a meeting of the company or its creditors convened to consider the approval of a proposal for a voluntary arrangement is to be adjourned, the meeting may also resolve to extend, or further extend, the moratorium period, subject to any conditions the meeting may impose.
Amendment No. 39 relates to paragraph 33(1). The meaning of the paragraph is perfectly clear. It provides that if a meeting of the company or its creditors resolves to extend, or further extend, the moratorium, it may also, with the consent of the nominee and subject to paragraph 33(2), resolve to establish a committee to exercise the functions conferred on it by that meeting. Those seem to us the objectives of the amendment. We are convinced that our wording achieves those objectives.
Baroness Buscombe: The Oxford Dictionary states that "resolve" means to disintegrate; that is one meaning. I think that I will have to return to this matter at Report stage. However, I press the point that if one resolves to do something that does not give effect to it. It is a great idea; you can resolve to do all sorts of things, but it does not necessarily mean that they will happen. I should have thought the Government intend that the measure should have the effect of summoning a committee.
Lord McIntosh of Haringey: The noble Baroness and I have no doubt spent far too much of our lives in committees. I believe that a resolution of a meeting which states that a committee is established establishes a committee. However, I shall write to the noble Baroness on that matter.