Clause 239 - Replacement of Part II of Insolvency Act 1986

Enterprise Bill – in a Public Bill Committee am 9:30 am ar 9 Mai 2002.

Danfonwch hysbysiad imi am ddadleuon fel hyn

Question proposed, That the clause stand part of the Bill.

Photo of Nigel Waterson Nigel Waterson Ceidwadwyr, Eastbourne

I want to speak briefly, largely to set the scene and to give some structure to our debates on part 10 of the Bill. In common with many outside organisations, we welcome some of the provisions intended to improve corporate insolvency. I find it remarkable that, despite what seems to have been fairly widespread consultation, I am being deluged with briefing papers and proposed amendments from a range of specialised organisations, which have a great deal to say on the subject. For example, major concerns, which we shall develop in depth in later debates, have been raised about the scrapping of administrative receivership in most instances. That is not necessarily helpful.

Perhaps the most dramatic problem that we will have to grapple with in our debates on part 10 is the fact that, broadly speaking, the rules in this country do not distinguish between corporate and personal insolvency. That creates a number of problems. Yet again, it seems that Government policy is driven by a rather superficial and partial understanding of what happens in the United States of America. When the right hon. Member for Hartlepool (Mr. Mandelson) visited the USA a few years ago, he came back with all sorts of ideas about encouraging enterprise and so on, and we are told that they are part of the main thrust of the reforms to be made under part 10.

Much of the reasoning behind part 10 is seriously flawed because it fails to distinguish between personal and business insolvency. Again, we shall develop that point when we debate the personal insolvency rules. It seems that the Government are in danger of changing the rules so dramatically that, far from encouraging enterprise, they will make borrowing more difficult and more expensive, encourage the feckless and even the dishonest to run up large amounts of credit, and leave creditors less able to recover assets from those who go into bankruptcy. At the end of the day, we may see here what happened in the USA, where there was an explosion in the number of personal insolvencies and a slight reduction in the number of corporate insolvencies. We shall go through the figures in the debate on a later clause.

Most people take the view that it would be wrong to remove all stigma from bankruptcy and all the difficulties associated with it because in a civilised

society the rule has to be that, when possible, debts are paid. To remove all the inconvenience and stigma of insolvency, particularly for individuals, would send a dangerous signal. That is particularly so now, at a time when we are seeing an explosion in consumer credit. We hear that people are borrowing more than ever, particularly on credit cards, but with less and less certainty that they will be able to repay the debt. Much of that is fuelled by the boom in house prices, a worrying development on which we shall be putting forward evidence from lenders. For instance, people taking out mortgages are borrowing not only 90 per cent. of the value of their new property, but the deposit, too. That bodes extremely ill for the future, particularly if there is a downturn in property prices, as there surely will be.

Those are some of the themes that we want to develop. We have also been asked to raise a mass of technical, practical concerns about how part 10, and particularly its initial provisions, will work in practice, and we shall explore those concerns in our amendments. I thought, however, that it would helpful to set out some of our thinking at this stage, and a short clause stand part debate seemed to provide the best opportunity.

Photo of Vincent Cable Vincent Cable Shadow Spokesperson (Trade and Industry), Liberal Democrat Spokesperson (Trade and Industry)

I should like to echo those remarks. We have a dense agenda, and the many technical amendments, particularly to schedule 16, will take up quite a bit of the morning.

It is useful for us to have a clause stand part debate, because the basic principle behind the proposals is not in great dispute. The Government are replacing receivership with an administration system that will attempt to enable going concerns to keep going, and we endorse that principle. For reasons that I do not fully understand, however, the consultation process did not work well. The feedback that we have—I am sure that the hon. Member for Eastbourne (Mr. Waterson) has the same sources—is that the consultation was often highly perfunctory. There was a round of consultation, a lot of feedback, and a very different draft emerged, but there was little consultation on it. This is a very specialised area, and there is a feeling among specialists that the consultation was not satisfactory and that there was not enough feedback, which is why they have suggested reams of amendments.

Many of the amendments deal with two sorts of failings in the Bill, which relate specifically to the Government's attempt to produce a streamlined administration system. First, the Bill often misses opportunities to speed up the administration process. Secondly, insolvency practitioners have told us that the time scale set for administration is hopelessly unrealistic. Indeed, we currently have the test-tube example of the Government's attempt to manage the administration of Railtrack. As far as I can see, the time taken far exceeds what is allowed for in the Bill. I would have hoped that there would be consultation with the Department for Transport, Local Government and the Regions on the practical problems of running a complex administration. Many of the amendments to schedule 16 relate to the concern

of professionals—there is no ideology involved—to make the process expeditious, as the Government originally intended.

In conclusion, I have a couple of general points. As the hon. Gentleman said, there is a problem with treating personal and corporate bankruptcy in the same way and in the same spirit. Poor individuals often have a problem accessing bankruptcy, and some of the new clauses suggest that that should be made easier in some cases, although the same philosophy may not be required in the corporate sector. Similarly, the philosophy of distinguishing between good and bad bankrupts is fraught with problems, although we shall come to that later.

Photo of Ken Purchase Ken Purchase Labour/Co-operative, Wolverhampton North East

It is appropriate to raise a couple of points that insolvency practitioners have put to me. First, on individual insolvency, the 12-month bankruptcy term may make bankruptcy more attractive to some debtors. The problem, it is suggested, is that it may substantially increase the number of orders, and the pressure on the courts to deal with them will increase by the same proportion.

Photo of Nigel Waterson Nigel Waterson Ceidwadwyr, Eastbourne

I am sure that the hon. Gentleman is aware—perhaps he was about to say this—that the Bill envisages a time scale that is significantly shorter than 12 months in many cases. Will he comment on that?

Photo of Ken Purchase Ken Purchase Labour/Co-operative, Wolverhampton North East

Yes, it makes worse the scenario that I am painting about the pressure on courts to determine those matters adequately and expeditiously. The Committee needs to hear, at an early point, what arrangements may be put in place to deal with those provisions in the Bill.

My second point is that it is now the official receiver who will determine whether the financial activity of a bankrupt was reckless. There is already considerable pressure on the Insolvency Service, so we need confirmation that it will be able to cope with an even greater work load. Will the Minister say what constitutes reckless financial activity, because understanding that would go a long way towards expediting what could otherwise be a messy process, resulting in a long queue of people waiting for their cases to be determined?

In general, we have imported into the provision ideas that stem principally from the American chapter 11 procedures, to prevent the unnecessary loss of residual business by precipitate action. I entirely support that, but if we follow that route, it is even more important that the safeguards that I mentioned should be in place.

Photo of Jonathan Djanogly Jonathan Djanogly Ceidwadwyr, Huntingdon

On the general purpose behind the comparative systems of administrative receivership and administration, we currently have two complementary systems. On the face of it, in clause 239, we are being asked to get rid of one of those systems, administrative receivership, and to enforce the system of administration. However, the more I look at the provisions, the more I see that

they would actually take something that is currently called administration and turn it into a new beast, which will be a combination of administration and receivership. Does that form the subject of a stand part debate on clause 239 or on clause 241, because the same issues arise in both clauses? It is important that we have a comparative debate, and to consider the question now, so I shall say a little more now and a little less in the debate on clause 241.

There are serious concerns for companies about the proposal to merge the two systems. The Government contended, in the White Paper and on Second Reading, that administrative receivership was somehow unfair to unsecured creditors, but there is a transparency in the current system that has often been missed. If someone wants to do business with a company, they can always do a quick check of the companies register to see whether a floating charge exists, and if it does, that usually dictates the terms on which trade is carried out. For example, order sizes may need to be restricted and payment terms made tighter than usual. For larger lenders, there is always the possibility of debt priority agreements, which are often used in practice.

The main point, however, concerns the cost of one system compared with the others. Receivership is relatively cheap and much quicker than administration, which tends to be court-intensive, slow and expensive.

It is important to appreciate that, under the present system, most companies that go into administration are eventually wound up. That is vastly more expensive, and so incurs a greater loss to creditors, than it would be to go into administrative receivership in the first place. That is why the process is not used so much at the moment for smaller companies, for which the costs of administration generally make it unrealistic. The Bill will mean more administrations, so more costs and possibly even less money for creditors.

The key to realising value to creditors in the majority of insolvencies, in which perhaps a voluntary arrangement or some other negotiation with creditors is not a possible alternative, will lie directly with the speed at which the underlying business of the company can be sold. Every hour of delay will increase the likelihood of selling the business as a going concern, which will reduce the value of goodwill and therefore the return to creditors.

By way of comparison between the two systems, it is vital that we understand the difference between a business and a company, which comes up throughout this part of the Bill. Many who have commented on the Bill have raised the subject. A company is the corporate body that owns the business. It can sell its business, become a shell with cash in it, and distribute that cash to its shareholders. If insolvency practitioners, whether administrators or administrative receivers, moved into a company, they could force it to sell assets or the whole or part of the company's business. In that case, the distribution would not be to shareholders, who would be bottom of

the pile. Distribution would apply first to secured creditors and then to unsecured creditors. Shareholders often receive little or nothing.

Before the Bill was drafted, the basic presumption in insolvency law was that the priority was the continuation of the business, which contained the goodwill and the employees. Effectively, that took priority over the interests of the company.

Photo of Nigel Waterson Nigel Waterson Ceidwadwyr, Eastbourne 9:45, 9 Mai 2002

We are all agog at this important seminar, from which I am certainly benefiting, as I think is everyone. Does my hon. Friend agree that some Labour Members may have been unaware of the potential impact of the changes on employment? They may not have known that, as he suggests, there may be more of an impetus to get rid of employees of a company, rather than to make a go of it.

Photo of Jonathan Djanogly Jonathan Djanogly Ceidwadwyr, Huntingdon

I thank my hon. Friend for clarifying the matter. That is exactly the point that I am coming to. By moving the impetus from continuation of the business towards keeping the company going under administration, the business could suffer as the value falls. As we know, most companies in administration go into liquidation anyway. The prospect of loss of jobs would become much greater. That is a great concern about the provisions. When insolvent, the value of a company will be its goodwill, but goodwill and job security will dissolve much quicker. That is why a speedy sale of the business through administrative receivership is often preferable to dragging the process out through administration, which could make matters much worse, as my hon. Friend said.

In certain circumstances, administration does give the company, and therefore possibly its employees, a greater chance of survival. However, that is at the risk of producing much less value to creditors if things do not go well, and if things do not go well, jobs are lost anyway. As administrations tend to end up in liquidation, that is serious. Returns to creditors are affected not only by the falling value of the company. The ongoing large costs of using insolvency practitioners are inevitably larger in administration, as is clear from the costs involved in the Railtrack administration.

I have been taking a straightforward line. The reality of putting the comparative systems into practice, insolvency practitioners tell me, is a lot more subtle and complicated. Administrative receivership is portrayed in the Bill as a practice that does not give everybody as fair a say in an insolvency process as in administration. In fact, since the last recession, receivership has been used increasingly sparingly by the banks. They do not generally use it as a quick way to dissolve companies—the slash and burn style that was prevalent in the 1980s. Now they use it much more as a lever to encourage insolvent companies to get round the table and enter into a debt arrangement—for example, a company voluntary arrangement. That is the best way to ensure the survival of the business.

The removal of administrative receivership will take away such leverage and, in effect, force companies to go down the administration route. It is important to

appreciate that that is a court process which, in most cases, will be unlikely to improve on decisions that are normally taken by right-thinking people who have a good idea of what is happening to a company on a day-to-day basis. I am informed by one insolvency adviser that, in the court process, judges rarely, if ever, review the insolvency accounts, because they are not accountants. In most cases, they take a view on what the insolvency practitioner puts in front of them. That often means that companies are able to run on, with fees going to the insolvency practitioners. The point is important because it is in the personal interest, although not the statutory interest, of insolvency practitioners that administration continues for as long as possible. That is how they earn their fees. That will happen increasingly when liquidation is the most appropriate route.

Another insolvency adviser describes the proposals as receivership by another means. That is because, importantly, floating charges will not be abolished by the legislation. Many in the insolvency world who did not see how the Bill was evolving did not realise that, but it is the case. The proposals might allow unsecured creditors a bit more of a say, but how will that help when the bank has all the votes? It is rather like sitting on the Conservative Benches in this Committee. Unsecured creditors will not receive any more money at the end of the day, but everybody will incur more costs through the administration procedure. There lies one of the big gaps in the provisions. We had a great chance to address the problem of excessive costs in the system, and we have not done so.

There is a major problem getting banks to lend to start-up and small businesses. That was no doubt in the Government's thinking when they made the proposals. Having looked at them carefully and spoken to many insolvency practitioners about how they work, I fear that they could make the problem worse rather than better, because in the absence of administrative receivership, banks might become less willing to lend to small companies without increased assets cover from which they can take their fixed charges. When they decide to lend, the interest could be higher because the risk is greater. In addition, a much greater use of personal guarantees is likely, which will hardly encourage the enterprise culture. I have concerns not only about the workings of the administration process vis-a-vis the administrative receivership process, but about the wider impact that the provisions might have on enterprise.

Photo of Mark Field Mark Field Ceidwadwyr, Cities of London and Westminster

I shall speak briefly because my hon. Friend the Member for Huntingdon (Mr. Djanogly) has covered many points. Clearly, we shall discuss some of the Government's intentions during the next four sittings.

Photo of Mark Field Mark Field Ceidwadwyr, Cities of London and Westminster

Only four sittings, I hasten to add.

Conservative Members support the underlying efforts to rationalise insolvency law. I confess to having been one of the legal fraternity, as I was a junior

lawyer in the early 1990s and was involved in several corporate restructurings. We often wished that we could have a chapter 11-type situation. That debate has continued and will no doubt be discussed more specifically.

I have two key concerns. My hon. Friend made the point that secured creditors will no longer have the same rights and that the real risk, especially for smaller companies, is that there will not be the same through-flow of money. There is great difficulty in this country in giving seedcorn capital to small companies. Taking the equity route is often impossible because venture capital outfits are not well suited to providing relatively small amounts of money, such as a few hundred thousand pounds. Debt, therefore, remains the main way in which such companies are funded in order to set up and to maintain operations in their first year or two of business.

I can understand the thinking behind the Government measure, but it has unintended consequences. A big difficulty is that, if there is no longer an opportunity for secured creditors to have a preference, companies may be starved of cash. As my hon. Friend pointed out, the other option is for individuals who are directors of such companies to act as personal guarantors, although that is also likely to create difficulties, especially for small start-up businesses.

I have recently been impressed by how many relatively young people—people in their 20s—are setting up businesses on their own. People of that age generally do not have assets, although they may have wealthy parents who could be personal guarantors—but that is less than ideal. The possibility that the banking sector is to be starved of money is clearly of great concern.

Photo of Mr Tony McWalter Mr Tony McWalter Labour/Co-operative, Hemel Hempstead

Does the hon. Gentleman agree that the abolition of Crown preference has the effect of introducing a significant source of new moneys into the system, which will make it more attractive for banks and others to undertake investment?

Photo of Mark Field Mark Field Ceidwadwyr, Cities of London and Westminster

I should tell the Committee that I had not briefed the hon. Gentleman, because I was about to make that point.

There is another unintended consequence of the abolition of Crown prerogative—

Photo of Mark Field Mark Field Ceidwadwyr, Cities of London and Westminster

Preference. If only we could get rid of Crown prerogative, how easy life would be.

In relation to Crown preference, the Government have given headline figures along the lines of £70 million. Many small companies have felt the claws of the Inland Revenue and Customs and Excise at their backs when going through financial difficulties. I should point out to the hon. Member for Hemel Hempstead (Mr. McWalter) that there is an unintended consequence even in this regard. Local Inland Revenue departments, if not Customs and

Excise, have been more amenable to smaller companies in letting them pay over a period of time and in making allowances for the cash-flow problems to which they may be subject. The real danger of abolishing Crown preference lies in that relationship with the Inland Revenue.

The affairs of many small companies will be dealt with by relatively junior members of staff who will feel that they need to perform and will find themselves criticised if many of the companies under their ward go under owing large debts to the Crown. The risk in lifting Crown preference is that, instead of having a strong relationship with the Inland Revenue so that during a certain period money need not be paid in order to assist and facilitate cash flow, such companies may go under more quickly. The Crown will realise that it has a once and for all chance of getting hold of its moneys and that if it does not do so immediately and waits for a few more months, allowing the money to go on tick, the company will go under. Thought needs to be given to that.

I would like to think that, in principle, at least in relation to corporate insolvency, we on the Conservative Benches support much in the legislation. However, as is so often the case, the devil will be in the detail. I point out to the hon. Member for Orkney and Shetland (Mr. Carmichael) that that is one of the reasons why we will spend the next 10 hours teasing out aspects of that detail.

Photo of Douglas Alexander Douglas Alexander Minister of State (e-Commerce & Competitiveness) 10:00, 9 Mai 2002

It is always a pleasure to serve under you on a Committee, Mr. Conway, and today it is a somewhat unexpected one.

The debate has been so wide-ranging that had I not spent most of last night reading the detail of the blizzard of amendments to be discussed in the coming 10 hours, I might have thought that we had covered all the issues. However, the point on which the hon. Member for Cities of London and Westminster (Mr. Field) ended is fair. Our challenge will be to focus on the detail. The virtue of starting the sitting with such a broad debate is that it ventilates some of the principal issues. With the indulgence of the Committee, I will answer some of the substantive points that have been raised. There will be plenty of scope to address the specifics of timings.

I was struck, not least in light of my last appearance before the Committee, by the somewhat uncharacteristically harsh tone of the criticism of the hon. Member for Eastbourne. I will bear in mind the scale of his concern about some of the details that have been brought to his attention. I hope that I will be able to offer him some comfort on certain points.

The first basic point, on which I would have thought we could find common cause across the Committee, is that a huge number of representations have been made to us. The complexity of the issues that we are dealing with partly explains the volume of material that we are receiving. The hon. Member for Twickenham (Dr. Cable) added to that point by suggesting that after an initial period of consultation there had been

amendments or developments in policy, but there had not been time to reflect that in further consultation. In all candour, the Government sometimes find themselves between a rock and a hard place. If we are serious in conducting a consultation, amendments and developments will inevitably result. One of the benefits of the time that has been allocated to this part of the Bill will be that, where there has been innovation and development in policy in light of consultation, we will have the opportunity to discuss that.

The hon. Member for Eastbourne suggested that we had a superficial understanding of the position in the United States. He referred to a trip to the United States made by a previous Secretary of State. As an alumnus of an Ivy League institution, I yield to no one in my admiration of the entrepreneurial culture of north America and the United States in particular. However, the Bill has been informed not just by looking at the United States and finding out what lessons can be learned from its approach to enterprise and its entrepreneurial culture, but by looking around the world.

We unashamedly assert that we have looked far and wide to ensure that innovations in policy that give us a world class position in our treatment of corporate insolvency and a range of other factors are peppered throughout the Bill. We make no apology for seeking to learn from overseas instances of best practice. On timing, which I sense will cause some contention and controversy, there are very insightful and interesting examples of equivalent processes elsewhere which support the Government's proposals.

The hon. Member for Twickenham suggested that some of the issues before the Committee were dense. In the wee small hours of this morning, the corrupting thought entered my brain that it was not the clauses that were dense, but the Minister who was advancing them. I leave it for members of the Committee to judge.

We shall cover timing in specific discussions. However, it would be difficult to disaggregate it from our general approach, which is to encourage the use of administration. That is the best way forward.

I appreciate that the point about the company as distinct from the business is of concern to the hon. Member for Huntingdon. He was kind enough to refer to the fact that we would have the opportunity to speak about it later, but I shall address his remarks specifically. Before I do so, I want to reflect on the observations of my hon. Friend the Member for Wolverhampton, North-East (Mr. Purchase). I shall bear in mind his remarks on personal bankruptcy, but given the scale and complexity of the clauses, I shall focus—with his indulgence—primarily on corporate insolvency. I am alive to the issues that he has raised, and there will be opportunities later to consider them in detail.

Before I turn to general points of principle, I want to address the specific example of Railtrack because if I do not do so immediately, I fear that it may be raised on several occasions. The administration of Railtrack is being dealt with under separate and distinct provisions, and not under the provisions that we are

discussing. I would not want to allow that red herring to continue to swim for the rest of the morning, although reference may be made to other, more prominent administrations. Thanks to the excellent blizzard of briefing that I have just received, I can inform hon. Members that the specific provisions under which Railtrack is being dealt with consist of an administration scheme that is specific to the railways regime.

Photo of Nigel Waterson Nigel Waterson Ceidwadwyr, Eastbourne

I understand why the Minister wants to set Railtrack aside, but even if it is being dealt with under a separate regime, it is not being dealt with so wholly differently from other administrations that lessons cannot be learned.

Photo of Douglas Alexander Douglas Alexander Minister of State (e-Commerce & Competitiveness)

I am happy to accept that there is a discrete statutory basis for Railtrack. The substantive point is that the timings under the Bill preclude the possibility of highly complex administrations, whether or not they fall within the Bill's remit, and I am confident that provision is made for the court's ability to recognise complexity and reflect it in the timings available to the administrator.

The substantive point raised by the hon. Member for Huntingdon was that company rescue rather than business rescue was the focus of the Bill. The hon. Member for Cities of London and Westminster said that he was a junior lawyer in the 1990s—a sin of which I am also guilty. When I looked at the briefing, I reflected that one of my principal tasks as a junior lawyer in the corporate law department was to establish and incorporate shelf companies for use by clients.

I am therefore aware of the hon. Gentleman's point about the capacity to have a legal entity that does not reflect the reality of the business. However, I am confident that the Bill reflects our intention, and that it will give the courts sufficient comfort.

In light of the way in which the courts interpret the statute, it may be helpful to explain to the Committee our thinking so that we have some clarity at the beginning of the discussion. We may return to some issues in discussion on the relevant clauses, but I shall give the Committee a flavour of the approach that has informed the judgment of the statutory wording. We want company rescue to be at the heart of our insolvency procedures to ensure that companies that can be saved have a decent chance of survival and are not driven to the wall unnecessarily. That will be good not just for companies, but for suppliers, customers and employees.

The hon. Member for Eastbourne referred to his deep and profound concern for employment. Has he had the opportunity to see the briefing on the Bill from the TUC, which I received only this morning? It welcomes the Bill. Given the TUC's track record on and regard for employment issues, I place great weight on that endorsement.

The first objective of administration would be to rescue the company and the whole or part of its business. We recognise that there is no use at all in making the administrator try to rescue companies that are, as the hon. Member for Huntingdon suggested,

merely empty shells, at the expense of rescuing viable businesses. The purpose ''to rescue the company'' evidently means to rescue it as a going concern, with the whole or much of its business intact. We are confident that the courts would interpret the purpose in exactly that way.

We also recognise that there will be some cases in which the break-up and sale of some or all of a company's individual businesses as a going concern will result in a better return for the creditors. Where that is the case, the duty of the administrator to act in the interests of the creditors will steer him towards that outcome. However, for administration to be effective as a rescue vehicle, it is important that we encourage companies, as well as their creditors, to use the procedure. In particular, we want to encourage smaller companies, many of which will have owner-managers, to use the procedure as a rescue vehicle at the early stages of financial difficulty.

Although there has been reasonable concern to ensure that statutory interpretation reflects the Government's intention, we must, equally, think about how the Bill will work in practice. To that extent, we have considered what the motivations of owner-managers would be in such circumstances. If the objective of administration were to rescue the company's businesses rather than the company itself, frankly there would be little incentive for directors of the company to enter into administration, which is one of the intentions of the Bill. We are confident, in legal terms, that the statutory interpretation bears that out.

Photo of Jonathan Djanogly Jonathan Djanogly Ceidwadwyr, Huntingdon

Assuming that the directors are shareholders, they would normally have every reason to want to save the company rather than the business, because then they would not lose their investment.

Photo of Douglas Alexander Douglas Alexander Minister of State (e-Commerce & Competitiveness)

I would accept that point were it not that timing is critical in such circumstances. One of our concerns was to ensure that, at the appropriate time, there would be a process of administration that offered a realistic chance of rescuing the business and company in question. The point at which directors make the judgment is key to the outcome. We believe that we have struck the appropriate balance to ensure that the motivation is there, and we are confident that statutory interpretation of the Bill will reflect our broader intentions.

On financing, which I am sure we will revisit later this morning, the hon. Gentleman suggested that the measure was somehow damaging to the interest of the banks. I refer to a statement of the British Bankers Association:

''Since then we have enjoyed a dialogue with your Department in which we have had the opportunity to explain how banks attempt to rescue businesses in severe difficulty and to suggest amendments to the proposals which would help the Government to achieve its objectives.

The Enterprise Bill, published today, reflects that dialogue.''

Many of the experienced members of the Committee are aware that such an endorsement is not offered lightly by organisations such as the British Bankers Association. We are confident that there has been

serious and genuine engagement by the Government and interested parties in the consultation on the Bill and that the outcome is adequately reflected in its drafting.

I am conscious that we will inevitably revisit several of the issues that have been raised in the stand part debate when we come to the specific parts of the schedule 16. I shall simply narrate the detail of clause 239 as a courtesy to the Committee, before asking it to support it. At that point, it would be appropriate to move on.

Clause 239 will do three things. It will replace the existing administration procedure provided for in part II of the Insolvency Act 1986 with schedule B1, which is set out as schedule 16 to the Bill. It will introduce schedule 17, which deals with minor and consequential amendments relating to administration, and it will provide the Secretary of State with the power to make consequential amendments to both primary and secondary legislation. On that basis, I move that the clause stand part of the Bill.

Photo of Mr Harry Barnes Mr Harry Barnes Llafur, North East Derbyshire

On the representations and involvement of the British Bankers Association, it may be remembered that earlier, when we were dealing with mergers, I quoted at length from an internal document of the BBA. I have been informed by a journalist who has investigated the matter that the BBA claims it is a forgery. Why it is a forgery, and why someone has gone to such great lengths to present it to me and alert me to other matters that we have been discussing, is of interest.

Question put and agreed to.

Clause 239 ordered to stand part of the Bill.