Enterprise Bill – in a Public Bill Committee am 2:30 pm ar 9 Mai 2002.
I do not want to detain the Committee, but I would like to comment on the administration process and, in particular, the provisions on the consultation of employees. The purpose of the amendment appears to be to ensure as full and detailed consultation as possible, and that all parties relevant to the administration are kept abreast of developments.
In that context, I want to take a second fully to endorse the points raised by the Trades Union Congress about this part of the Bill. The TUC strongly supports its thrust, which is to facilitate company rescue where practical and make it the main aim of administration, and says:
''Whether or not a company rescue is possible, it is essential that workers and their representatives are kept informed of developments and consulted as to their views on the possible options under consideration by the administrator. There should be an obligation on the administrator to keep the workforce and their representatives informed of developments as they unfold and to consult them before making decisions on how to proceed.''
Labour Committee members would strongly endorse that view. We know that the Bill says that the administrator should send a copy of his proposals
''to every member of the company of whose address he is aware.''
In supporting the TUC's comments, I ask the Minister whether he is satisfied that the period of 28 days gives sufficient opportunity to get those proposals to all company employees and, if possible, consult them on the steps ahead.
I have spoken to several insolvency practitioners, and the time limit was the one issue on which they all concurred. They feel that the 28-day period is simply unrealistic. As one of them said about the proposal,
''Frankly, if you're dealing with a company that owns a shoe shop, it would be fine. But, if you're dealing with an Enron or Federal-Mogul''—which owns some 600 to 700 companies as part of its group—''the idea of putting this together in 28 days is simply not feasible.'' I was also told that if the Government want to follow the time-limit approach, they should relate it to the size of the administration. There could be a 28-day period for a single company or small group of companies, and an increasing amount of time as the case becomes more complicated. The Government may wish to consider something along those lines.
For practical purposes, I imagine that the Government would wish to avoid the administrator being little more than a rubber stamp. There is a great danger that a 28-day rather than a three-month period would risk the administrator seeing the full list of proposals merely as a boilerplate document. As those of us who have worked in legal firms know, too often the first instinct is to ask, ''Is there a precedent?'' and to follow the two-page document shown on the word processing system.
There is a danger that a 28-day time frame would risk the administrator seeing what should be an important document as a perfunctory part and parcel of the process. A standard, vague, two-page document would be provided that did not go to the heart of his efforts to put things in place. The best administrators work in tandem with the key management of a company in trouble by having a recovery plan in place. I accept that it should be in the directors' hands before the administrator is appointed, as there needs to be a vision about how a company can be driven forward in future. An administrator can play an important role in that regard.
A restrictive deadline such as the one proposed would risk the process becoming a paper chase. The period of time proposed will not allow the administrator to use his commercial acumen and his experience of other administrations to make a genuine difference to the company's long-term recovery, its business assets and the future rights and opportunities of the employees.
I start with an observation: I concur with the point made by the hon. Member for Eastbourne (Mr. Waterson) in noting, with some curiosity, the description of the Government's motivation in the matter as political. In our many deliberations on strategy in the run-up to the last election, the time scale of corporate insolvency did not feature prominently. None the less, several matters relating to timing have been raised by my hon. Friend the Member for Hemel Hempstead (Mr. McWalter), and by Opposition Members. The issue is important and worthy of a serious response, which I shall endeavour to provide.
In respect of amendment No. 416, there is some nervousness in the insolvency profession about the proposed time scales, although I believe, not least in the light of hon. Members' contributions, that those concerned are unduly cautious about what is
achievable. That touches on the point made by the hon. Member for Cities of London and Westminster (Mr. Field). The proposed time scale will not result in a pro forma exercise; it will provide the basis on which a substantive document can be produced. The view expressed may be unduly influenced by those practitioners who deal with large cases, especially given that the example cited was of either a shoe shop or Enron. However, in cases of such scale and significance as a company the size of Enron, there is provision for an application to be made to the court about the timings involved.
My officials have taken clear soundings with those practitioners who specialise in the smaller cases—
It is important to appreciate that each application will have significant cost implications. The cost for a large case would be about £15,000 per application, and that money would be taken away from creditors.
We must be aware of the incentives intended to ensure that administrations are more broadly used and thus to give a degree of certainty when people go into administration and when they anticipate coming out of it. The proposed time scales probably strike the right balance. The amendment refers to the time scale in the proposal, but there is also specific provision for an extension or an application directly to the court. There is thus a balanced approach, which recognises the gradations and possibilities.
My officials have taken soundings with practitioners who specialise in the smaller cases, who think that the time scales will be more than adequate for cases at the smaller end of the market. As I said, clear exit points will be important for smaller companies for which at present costs are a potential barrier to entering administration.
I do not want to make my hon. Friend's life more difficult, but I give an example of a case with which I was dealing in which I thought Customs and Excise behaved very unreasonably. Although the company was small, its paperwork was not in the best order. That sometimes gives rise to the size and expectations of the operation that makes a claim on the company's assets. The company's capacity to respond might be out of kilter with that, even though it has strong claims to viability, as was the case in the example that I have given.
I am grateful for my hon. Friend's points. Two issues arise: the conduct of Customs and Excise and the possibility of Inland Revenue involvement. I have some observations to make on Crown preference, when we come to discuss it, that will allay some of his concerns about the actions of public bodies. His second point accords with the spirit of the Bill, which is to ensure that administration will become more accessible and attractive, not least to the type of smaller firm that is conscious of the costs and paperwork involved.
The profile of cases going into administration as a result of the Bill will shift towards those that are
smaller and more straightforward, for which the time scales will prove to be more than adequate. In response to the point made by the hon. Member for Huntingdon (Mr. Djanogly), I accept that some cases cannot be completed within those time scales. Where an extension is required, it can be obtained by consent from the company's creditors and/or from court for a further period of anything up to three months. An extension from the court can be for any period that it considers appropriate, and it will be up to the administrator to justify the period sought. There should therefore be no need for frequent applications for extensions for the consequential costs involved.
Returning to the shoe shop scenario, there may be 10 creditors who can be called in one morning. We are talking about a company that has 600 or 700 subsidiaries. I would challenge anyone to call round the creditors and organise consent.
As I have endeavoured to show, we are alive to the reality that there is a spectrum of potential cases for which administration seeks to address the outcomes. Our substantive point is to provide a more accessible and streamlined approach that addresses the particular needs of smaller firms and has the flexibility necessary to accommodate some of the larger and more complex cases, about which the hon. Gentleman spoke. Even in those larger cases where, for example, the automatic three-month period of administration might not be long enough, it should often be possible for the administrator to seek an extension of sufficient length to remove the need for more than one application thereafter.
It may be of some use and give some comfort to the Committee to know that my officials have been in contact with their opposite numbers in Australia who introduced a similar system some years ago. We have re-lived some of their experiences in the protests that were raised before today's sitting about the time scales. The time scales in Australian voluntary administration procedures are even tighter than those in the Bill. Proposals have to be prepared within 21 days—not 28 days, as the Bill proposes. Similar concerns were initially raised about the time limits being too short. However, I understand that the general consensus now emerging is that although timing is tight, especially for businesses with complex operations, it is not impossibly so. Officials in Australia have reported that they are happy with the way their system is working, and that the benefits of the tight time scales far outweigh the costs.
A key point that arose from the consultation process was the view that administration takes too long, and that there is no certainty of when creditors will get their money. That needs to be addressed to reassure the lending community. Our time scales are not unreasonable in the light of experience in Australia. The amendment would extend the period during which an administrator will be required to prepare and send out his or her proposals from 28 days to three months. The 28-day time scale is rightly stringent. The process will be sufficiently flexible, as I have sought to show, not least because we have incorporated sufficient opportunity for that time limit and others to be extended when necessary.
My hon. Friend the Member for Leigh (Andy Burnham) made a point about information and consultation of employees, which the TUC briefing addressed. Employees are also creditors, and there will be consultation mechanisms in the Bill. However, that is subject to a recently agreed EC directive, on which there will shortly be consultation about implementation. I therefore argue that it is inappropriate to deal with that issue in this insolvency legislation. The issue is, after all, a more general one of employment rights. I am nevertheless aware of my hon. Friend's point.
I hope that I have answered the Committee's concerns and I invite the hon. Member for Eastbourne to withdraw the amendment.
How did this time change arise? It seems to be yet another example of a mish-mash of two regimes becoming one regime. Other examples include the ability of companies to appoint their own administrative receivers, or of holders of floating charges to appoint their own administrators when previously they had to go to court. We see a merging of two regimes, which applies in this instance to insolvency practitioners saying that they need more time, and to the banks—having got to the Government—saying that if administrative receivership is being abolished, the new system should be as close as possible to it so that their interests are not prejudiced. Will the Minister comment?
It was certainly good to see so many responses during the consultation process, not least from insolvency practitioners and the banks. I would be intrigued if anyone interpreted my earlier remarks to mean that we have somehow been ''got at'' by anybody, though we were determined to maintain an overall rationale for the Bill; providing greater certainty and streamlining to produce a more attractive and accessible process. Of course, that means making fundamental choices. I appreciate that the community of insolvency practitioners has some anxieties on this matter, but I hope that the Australian example, in which even more stringent time scales were set, will assure them that the process can work effectively for the relevant practitioners.
The time scale of 28 days was included in the original consultation documentation of July 2001, which was the White Paper. Less comment was then made on this issue than on others. The opportunity for ventilating the issues has been provided. Ultimately, the Government must choose.
My hon. Friend has nearly convinced me. He has provided strong arguments for the 28-day period, but is not the small window of opportunity partly a consequence of what precedes the appointment of an administrator? We are trying to achieve a more co-operative relationship between a company in trouble and the available expertise. Will the Minister affirm that the Small Business Service could be revamped to become more accessible to small businesses and allow them to take advantage of help at an earlier stage?
I shall answer my hon. Friend with a couple of remarks. Our ambition is partly connected with time scale, but also, more broadly, with administrative re-fashioning. We want to make help more accessible to precisely the sort of firm that my hon. Friend describes. The profile of companies that have used the administration procedure up to now suggests scope for a rebalancing to address my hon. Friend's point. If managers or directors of companies can anticipate getting into difficulties and secure help earlier, it would be entirely consistent with the spirit of the Bill. We want to provide the means for a company to go into administration, but also to come back out again within fairly tight time scales, ideally in circumstances where company business and employment is safeguarded and the organisation can find a way forward.
I am aware of the role of the Small Business Service in supporting a range of different small businesses. I shall ensure that my hon. Friend's comments are brought to its attention.
We have had a remarkably long debate on an amendment that talks about leaving out ''28 days'' and inserting ''three months'', but it is an important point. It is not raised by the Conservative party, as the Minister pointed out. There is little political glory for anyone in these provisions, although when we come on to personal insolvency we will suggest that there is clear blue political water between the parties. We are simply trying to put across the views of practitioners who, in perfectly good faith and based on experience, say that some of these time limits are ''preposterous''. They should know what they are talking about.
I cannot comment on the experience in Australia. History dictates that it is dangerous to assume that one can transplant a set of proposals from one jurisdiction to another and it will all work out the same. Nor do I have the benefit of the briefing from the TUC on which the Minister and other hon. Members have relied. I assume that the TUC thought it not worth the postage to send it to Conservative members of the Committee. It would be an interesting acid test to see whether the TUC bothered to send it to the Liberal Democrats or which of the three factions within their membership it chose. The TUC briefing would no doubt have changed our views on the whole issue. If I thought that we would win the vote I would probably ask my hon. Friends to support me in pushing this to a vote. As I do not, I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
I beg to move amendment No. 441, in page 253, line 25, leave out
'Paragraph 49(1) shall not apply'.
With this it will be convenient to take the following amendments: No. 443, in page 253, line 33, at end insert
'paragraph 49 shall apply unless the court orders otherwise but paragraph 51 shall not apply.'
No. 444, in page 253, leave out lines 34 to 43.
No. 538, in page 254, line 7, leave out 'After the conclusion' and insert
'Within seven days'.
No. 539, in page 254, line 8, leave out
'as soon as is reasonably practicable'.
No. 540, in page 255, line 6, at end insert
'and that he considers the proposals approved at the initial creditors' meeting are not reasonably likely to be achieved'.
Government amendment No. 491.
No. 541, in page 255, line 31, leave out paragraph 56.
No. 449, in page 266, line 39, leave out 'A creditors' and insert
'The initial creditors' meeting, or any creditors' meeting held before that'.
Yet again, I have not had the benefit of the TUC's views on these amendments, but I will struggle on regardless. I will speak to amendments Nos. 441, 443 and 444 together. As currently drafted, paragraph 50 allows the administrator to dispense with an initial creditors meeting in any of the circumstances mentioned in sub-paragraph (1). I hope that hon. Members are listening as I may ask questions at the end. At present, initial creditors meetings are held in all insolvencies, including administrative receiverships, where there is likely to be no return to unsecured creditors. Those are the circumstances foreseen by sub-paragraph (1)(b).
Even if there are no decisions for the creditors to make, such meetings provide them with an essential opportunity to raise matters of concern, both as regards the events leading up to the insolvency and the further conduct of the insolvency. The amendments are designed to change the Bill to require a creditors meeting to be held in all cases, with the proviso that the court can order otherwise, but to remove the creditors' powers in relation to the administrator's proposals under paragraph 51 where the creditors are unaffected by those proposals. I hope that that is clear.
Amendments Nos. 538 and 539 relate to what is supposed to be a key step in what is anticipated to be a fairly short period of administration. Putting in a definite period will provide a greater degree of consistency. Rule 1.24(3) of the 1986 insolvency rules requires the chairman of a voluntarily arranged meeting to report the results to the court within four days. We think that seven days should be perfectly reasonable in that context.
There does not appear to be any need to cause an administration to fail automatically on the rejection of a revision if the original proposals can still be pursued effectively. Amendment No. 540 would still give the administrator the protection he needs and brings administrations into line with the current practice on voluntary arrangements, which I am told has worked reasonably well.
Amendment No. 541 would simply leave out paragraph 56. That is based on the view that, in the interests of transparency and accountability, matters
to be considered by creditors should always be considered at meetings. A meeting would also enable creditors to debate the issues among themselves and raise points and concerns of which the administrator may be unaware.
Amendment No. 449 concerns paragraph 96. Paragraph 96 allows an administrator appointed by the company to be replaced by the creditors at any time, which could make administrators reluctant to take on commitments and responsibilities. The amendment would provide that creditors could not replace the administrator once the initial meeting had taken place. The court would still have the power to replace an administrator. The amendment has the additional advantage of giving the administrator an incentive to hold the initial creditors meeting as quickly as possible. As I explained, if the amendments to paragraph 50 were accepted, there would always be an initial creditors meeting.
The amendments have all been suggested by accountants and practitioners in the field and are designed to make the system work more effectively. I commend them to the Committee.
I shall speak first about amendments Nos. 441, 443 and 444. Although we agree that creditors should be fully involved, it is right and proper to focus their involvement in cases in which they have a financial interest. The amendments would create an obligation to convene a creditors meeting, or to seek leave of the court not to do so in all cases, including those in which it is unlikely that the unsecured creditors will have any financial stake. That would add to costs, burden the courts and reduce the returns for those creditors who have an economic interest.
Amendments Nos. 538 and 539 would require the administrator to report on any decision taken at an initial creditors meeting within seven days rather than as soon as is reasonably practicable. If the administrator is able to issue the report sooner than seven days, why should he not do so? The administrator should report as soon as is reasonably practicable, which is what the provision requires.
Amendment No. 540 relates to paragraph 53. The paragraph allows the court to make provision in cases in which an administrator reports to the court that a creditors meeting has failed to approve his or her proposals. In cases in which the creditors have failed to approve a revision of the administrator's proposals, the amendment would provide that the administrator only reported to court if he considered that the proposals approved at the initial creditors meeting were not reasonably likely to be achieved.
However, the amendment is unnecessary. The administrator is required to report the outcome of the creditors meeting to the court so that it has a record of the administration's progress. Paragraph 53 allows the court to make provision in such circumstances, but does not require it. In deciding what to do, the court is likely to attach a great deal of weight to the professional judgment of the administrator. If the administrator made it clear that he or she believes that the initial proposals that were
approved by the creditors are still workable, and that the creditors were aware when they voted on the revisions that if they rejected the revisions the administrator intended to follow the initial proposals, the court would be likely to allow the administrator to continue with the administration and follow the initial proposals.
When creditors have rejected revisions to an administrator's proposals, it is right that the court should have the opportunity to consider the circumstances of the particular case and end the administration, or make an order if it thinks that is appropriate. However, the power is discretionary and will not prevent an administrator from pursuing proposals that have already been approved by creditors if the administrator persuades the court that that is the right way to proceed. I therefore ask the hon. Gentleman not to press the amendments.
Amendment No. 491 is a Government amendment. The Bill provides that a floating charge holder can appoint an administrator by the out-of-court route when there is an outstanding winding-up petition against the company. In such cases, the winding-up petition will be suspended rather than dismissed, as the court has not made an order on it. That will mean that the creditor concerned does not have to go to the trouble and expense of presenting a petition if the administration is not successful. Amendment No. 491 will allow the court to consider the suspended winding-up petition and make an order on it if a creditors meeting fails to approve the proposals put to it by the administrator, and the administration therefore does not reach a successful conclusion. I ask hon. Members to support this amendment.
Amendment No. 541 would remove the provision that allows a creditors meeting to be held by correspondence. The purpose of the provision is to prevent unnecessary bureaucracy and costs in cases in which the business that needs to be conducted at a creditors meeting can just as easily be handled by correspondence.
The details of how the administrator should go about dealing with creditors through correspondence will be covered in the rules that accompany the new legislation. They will ensure that any correspondence is handled appropriately and fairly so that creditors are not disadvantaged. On the contrary, conducting business by correspondence will save creditors the time and expense of having to travel to meetings. I ask that the amendment be withdrawn.
I ask the Committee to resist amendment No. 449, which would restrict the creditors' ability to replace an administrator appointed by the directors or company to the period up to the initial creditors meeting. That paragraph relates to the replacement of those administrators appointed by the directors or company through an out-of-court route where there are no floating charge holders to veto the appointment. Although we do not anticipate that creditors in such a case would wish to replace the administrator as a matter of course—or indeed often—if the opportunity to do so is restricted only
to the period leading up to the initial creditors meeting, they will have little opportunity to assess the office holder or his or her performance. It is likely that the first opportunity for creditors to interact with the appointed administrator will be the initial creditors meeting, so it does not seem appropriate that that should also be their last opportunity to veto the directors' or company's choice of appointment.
I am happy to beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Amendment made: No. 491, in page 255, line 11, at end insert—
'( ) make an order on a petition for winding up suspended by virtue of paragraph 38(1)(b);'.—[Mr. Alexander.]
I beg to move amendment No. 542, in page 256, line 34, leave out paragraph 64.
With this we may discuss the following amendments:
No. 417, in page 256, leave out lines 34 and 35 and insert
'The administrator of a company may make a distribution to creditors of the company who are neither secured nor preferential only—'.
Government amendment No. 492.
Amendments Nos. 542 and 417 are supported by the CBI and some practitioners in the business, who believe that the provision is misconceived. The provision assumes that the administrator needs a power to pay what are called ransom creditors in the interests of creditors generally. Currently, administrators deal with ransom creditors as a matter of discretion, without involving the court. It is therefore difficult to see why the provision is needed.
There is much to be said, however, for providing administrators with a power, in appropriate circumstances, to make distributions to all unsecured creditors as they go along. That is particularly the case if the administration needs to continue for some time, such as when parallel litigation is going on. Currently, the only way in which the administrator can find a medium for distribution is to go through the rather artificial process of proposing a parallel company voluntary arrangement for distribution purposes only. We believe that the administrator should have a power to distribute, but only with the blessing of the court. I commend the amendments to the Committee.
I shall deal with amendments Nos. 542 and 417 before speaking to Government amendment No. 492. The Bill introduces the power for administrators to make payments to unsecured creditors with the permission of the court. That would include payments to all the unsecured creditors in part or final settlement of their claims in proportion to those claims, which in insolvency procedures are usually referred to as a ''distribution.''
Amendment No. 417 would allow the administrator to make distributions, rather than simply payments, to unsecured creditors during the administration. However, as I have said, the Bill already allows that. Amendment No. 542 would remove the requirement
for an administrator to seek the permission of the court for any such payment to creditors. The Bill requires that, in all cases, other than under the Crown preference ring fence. We recognise on reflection that there will be circumstances in which the administrator should be able to make a payment to an unsecured creditor without the court's permission when the payment would help to achieve the purpose of the administration. Amendment No. 492 will allow for that. In light of that, I ask the hon. Gentleman to withdraw the amendment.
As I indicated, amendment No. 492 deals with the circumstances in which an administrator can make payments to unsecured creditors. At the moment, paragraph 64 provides that the administrator can make payments to unsecured creditors with the permission of the court, or without the permission of the court if the money is part of the fund that has been ring-fenced for unsecured creditors by virtue of new section 176A, following the abolition of Crown preference.
On reflection, however, we do not think that a distinction should be drawn in that way based simply on whether the money is part of the ring-fenced funds. Removing the reference to section 176A will ensure that the payment of ring-fenced money is treated by the administrator in the same way in which any other payments to unsecured creditors are treated. We would usually expect the administrator to put the company into voluntary liquidation in order to make distributions to unsecured creditors; otherwise he or she will have to get the permission of the court.
As I already mentioned, the amendment will ensure that the administrator should be able to make a payment to an unsecured creditor without the permission of the court when the payment would help to achieve the purpose of the administration. In the case of a company that operated from a tall office block, if the lifts broke down and the administrator was trying to rescue the company, it would be vital to get the lifts working again. If the lift maintenance company refused to carry out the work unless debts owed to them were paid, and it was difficult to obtain service from another company, the administrator should be able to pay the debt without court sanction. With that colourful example, I ask hon. Members to support the amendment.
I hate to think of people stuck in lifts as a result of the amendment. I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Amendment made: No. 492, in page 256, leave out line 37 and insert:
'(b) if the administrator thinks that the payment is likely to assist achievement of the purpose of administration.'—[Mr. Alexander.]
I beg to move amendment No. 446, in page 257, line 9, at end insert:
'(1A) Subject to sub-paragraph (3), where no proposals have been approved under paragraph 51 the administrator of a company shall manage its affairs, business and property in accordance with paragraph 3'.
The Bill does not indicate how the administrator should manage the company's affairs in the period before the initial creditors' meeting. Many businesses are too fragile to withstand the hiatus between insolvency and that meeting. The administrator needs full powers from the time of his appointment, which he currently has. That practical point has been made by people who do this sort of thing day in, day out, and who ought to know what they are talking about.
I will speak only briefly to the amendment, as what we are trying to achieve is self-explanatory. Much of the Insolvency Act 1986, in effect, is being repealed and other elements are being integrated in the Bill. We are entering a new area of insolvency law. As my hon. Friend the Member for Eastbourne rightly pointed out, until we have had several years of what might be called normal practice and custom, administrators may be concerned to avoid doing anything for which they may be criticised. There is therefore concern that the hiatus may be for days or, for whatever reason, a fortnight or so.
There is a risk that administrators and directors of companies will do nothing, and will feel hamstrung and paralysed against taking any action. It would be sensible to clarify what the administrators' powers are, so that if there is to be a period between the insolvency and administration and the initial creditors' meeting, actions can be taken to ensure that the good will of the company is maintained as far as possible, particularly in the smaller service-related sector. An important element of good will is often the people who work for a company. Even a two-week period between insolvency and a fully-fledged creditors meeting can be difficult when the whole place is paralysed and it is difficult to hide. Some key employees might end up feeling that the best thing would be to walk out on the business. That would be entirely counter to the Government's aim of improving enterprise and ensuring that insolvency provisions allow companies to remain a going concern as far as possible.
Will the Minister offer some guidance and explain why the change is being made? How does he envisage the administrators' powers falling into place within the hiatus period? During the interregnum period and the next few years, as a new area of law comes into force, guidance will be necessary as administrators will not be able to rely on custom.
I have listened carefully to the arguments of both hon. Gentlemen. Neither under existing legislation nor under the Bill is it intended to make an administrator seek the directions of the court. Rather, an administrator merely has to comply with any directions that the court gives, if its opinion has been sought.
The Bill sets out, albeit in modern, plainer language, the provisions under existing legislation; that the administrator may do anything necessary or expedient for the management of the affairs, business and property of the company and that he or she may apply to the court for directions in connection with his or her functions. Paragraph 67 is intended to apply where any such directions have been obtained and requires the administrator to manage the affairs,
business and property in accordance with those directions. We have no intention of changing the law in that regard and the drafting does not do so. I am happy, however, to reflect further on the hon. Gentlemen's comments and return to the issue on Report. In that light, I hope that the amendment will be withdrawn.
I beg to move Government amendment No. 493, in page 257, line 36, leave out first 'charge' and insert 'security'.
With this we may take Government amendments Nos. 494 to 496.
These are simply technical amendments to change the term ''charge'' to ''security'' in paragraph 70. ''Security'' is slightly broader than ''charge'' and is the term used in section 15 of the Insolvency Act 1986—we referred to it this morning—which is replaced by paragraph 70. Our intention is that the scope of the existing provision should not be altered. I therefore invite hon. Members to support the amendments.
Amendment agreed to.
Amendments made: No. 494, in page 257, line 37, leave out 'charge' and insert 'security'.
No. 495, in page 258, line 5, leave out 'charge' and insert 'security'.
No. 496, in page 258, line 7, leave out 'charges' and insert 'securities'.—[Mr. Alexander.]
I beg to move amendment No. 515, in page 258, line 17, at end insert—
'( ) Where the goods are used by the administrator to continue running the business, the administrator must make payments to the owner of the goods under the terms of the hire-purchase agreement.'.
With this we may take amendment No. 516, in page 258, line 28, at end insert
'to include any additional value attributable to the owner's ability to re-hire the goods.'.
These amendments were suggested by the Finance and Leasing Association, which, in common with the TUC, has been fairly catholic in whom it has chosen to brief. It states in the covering note that the timetable in the Bill for the administration process is
''wholly unrealistic and will hinder rather than streamline the procedures.''
Amendment No. 515 is intended to deal with the following situation; if the administrator is using goods under a hire purchase agreement—a company might hire equipment to produce its goods, vans for distribution and so on—the owner of the goods should continue to receive payment under the terms of the agreement. The administrator should not delay disposing of the goods if they are not in use and payments are not being made under the agreement. The amendment is designed to reflect the ruling in the
case involving Atlantic Computer Systems plc in 1992. The Minister will be familiar with its terms and will be able to tell us about it. The point needs to be made clear in the Bill, and that is the purpose of the amendment.
Amendment No. 516 deals with a slightly different issue. The market value of equipment will not in all cases compensate the lender for the goods on hire. The re-hire value is often worth more than the market value and where the equipment is still within its basic life expectancy, the lender will seek to re-hire in order to capitalise on its investment. The court should be able to use its discretion in such cases, hence the amendment.
I shall resist the temptation to be drawn into a discussion on individual case law and refer to the amendments.
Paragraph 71 sets out the way in which the administrator can deal with hire purchase property. Amendment No. 515 would provide that where the administrator used hire purchase goods in order to continue running the business, he or she would have to make payments to the owner of the goods under the terms of the hire purchase agreement. However, that situation is better dealt with by existing provisions in insolvency law, which have been incorporated into the schedule. If the owner of the goods is not being paid for their use, paragraph 41(3) provides that he or she may ask the administrator to return them; if that is not granted, he or she may go to court to seek permission to repossess the goods.
Case law sets out a number of principles for the courts to follow in deciding such cases; in particular, administration for the benefit of unsecured creditors should not be conducted at the expense of those who have proprietary rights over goods. But the courts are also required to weigh the legitimate interests of the owner of the goods against those of the company's other creditors. In doing so, they should take into account, among other things, the prospects for the success of the administration. We want the courts to continue to be free to carry out this balancing act on a case-by-case basis.
Paragraph 71(3) provides that if the court makes an order enabling the administrator to dispose of hire purchase goods, he or she must pay the owner of the goods the net sum that would have been realised if the goods were sold at market value. Amendment No. 516 would require additional money to be paid to take account of the owner's ability to re-hire the goods. That is not right. The owner should be paid the amount that the goods are worth at market value. That will enable the owner to replace the goods if he or she wants to. If the owner believes that some value attaches to the goods as a result of their capacity to be hired, it is up to him or her to persuade the court that that should be reflected in its estimation of their market value.
The amendments are designed to strengthen the position of the leasing company. If they are not accepted, there is a risk that there will be less opportunity for hire purchase. That may be detrimental to small businesses starting out, who
may be vulnerable to the market and to difficulties in the economy, and who may therefore be disinclined to buy property outright. For example, it is the norm for small printing companies to take out hire purchase agreements on printing machines as they become obsolete so quickly, and that is the nature of their market. If there are stronger restrictions on hire purchase companies, an obvious way for small concerns to build up their business will be removed. Has the Minister given that matter any thought? Does he have any ready statistics that would suggest how the current situation could differ from what will happen in the future if the amendment were rejected?
I cannot offer ready statistics. I hope that I can offer a rationale, although I hesitate to use the term, given the degree to which it was pored over in discussions last week.
Our intention is that the situation reflects the current position, and I listened with interest to the hon. Gentleman's observations about a smaller company using hire purchase. I cannot comment on individual commercial judgments made by printing or other companies, but consultation has taken place at every stage of the Bill. I have not seen any evidence of legitimate concerns about why the provisions are materially different from what has been anticipated after the consultation process. Although his example was credible, it was hypothetical. If a community of interests had any particular concerns, it has had ample opportunity to bring them to our attention during the consultation process. The fundamental rationale is that the provisions reflect the position at present, so I am not entirely convinced by the scenario outlined by the hon. Gentleman.
We have had an interesting debate, but all good things must come to an end. I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
I beg to move amendment No. 466, in page 259, line 10, leave out ''claiming'' and insert ''on the grounds''.
The genesis of the amendment comes from concerns expressed by the Law Society about the use of the term ''claiming'', which it feels is too vague and open to abuse, with unfounded applications. The altered wording that we propose would ensure that when a creditor or member of a company applies to the court to challenge the administrator's conduct, the creditor or member must have basis in fact for doing so. It must not simply be based on some spurious claim that may or may not be justified.
I suppose we are straying into the realms of the terms of written pleadings, and if the Minister can give me some assurance that proper rules of court will be put in place to ensure that any such application will be well founded, I shall be content to leave matters at that.
On paragraph 73, if the creditor or member of the company thought that the administrator was acting in a way that was cost-
excessive, would that constitute either claims or grounds?
I am intrigued by the question, but we are in danger of making a mountain out of a molehill in terms of what the Law Society is recommending. This is simply a drafting point. The provision allows a creditor to go to court ''claiming'' that certain things have happened, whereas the amendment would allow a creditor to go to court ''on the grounds'' that certain things had happened. The effect of the proposed change is captured within the existing wording, so the amendment, which reflects the views of the Law Society, is unnecessary.
The more substantive point of excessive cost covers a wider range of issues than is captured solely in this schedule. If it will help the hon. Gentleman, I shall write to him to clarify that particular point.
I beg to move amendment No. 423, in page 260, leave out from line 27 to line 24 on page 261.
With this it will be convenient to take the following amendments:
No. 467, in page 260, line 29, leave out 'three' and insert 'six'.
No. 517, in page 260, line 29, leave out 'three' and insert 'twelve'.
No. 468, in page 260, line 32, leave out 'a specified period' and insert
'such period as the court shall determine appropriate'.
No. 469, in page 260, line 33, leave out
'a specified period not exceeding three months'
and insert
'such period as shall be determined appropriate'.
No. 518, in page 260, line 34, leave out 'three' and insert 'twelve'.
No. 424, in page 261, leave out lines 2 and 3 and insert—
'(b) either (i) a meeting of creditors; or (ii) creditors of the company whose debts amount to at least 50 per cent. of the total unsecured debts of the company (if any).'.
No. 425, in page 262, line 12, after 'copy', insert
'to the person or persons who appointed him, to the company and'.
Amendment No. 423 has a strong provenance, in that the CBI and several practitioners organisations support it. It could be counter-productive to restrict the periods during which administrations may continue, even if, first, the creditors and, later, the court can extend them. It can take a long time to prepare restructuring plans and to negotiate satisfactory arrangements with potential financier suppliers and major customers to enable a business to continue. We argued the case this morning that what matters is saving a business, not necessarily a company. If a business is to be sold, it can take
several months to prepare sales information to find a purchaser and negotiate the agreement.
If the company is to be rescued through a voluntary arrangement, it may still be appropriate for the administration to continue so that the administrator can pursue remedies that are not available to the supervisor of a voluntary arrangement. One example is to have a transaction at an undervalue set aside under section 238 of the 1986 Act. Such litigation could take two to three years; easily, I interpolate. An administration for a restricted period cannot be regarded as a substitute for an administrator receivership that is unrestricted in length. Receiverships frequently last for more than a year, for example while litigation is pursued or efforts are made to obtain planning permission for development.
Amendments Nos. 517 and 518 offer an alternative to the amendment that I just described. They keep paragraphs 75 to 77 as they are, but substitute a more sensible time limit. I would be happy if the Minister accepted either amendment.
Amendment No. 424 will be unnecessary if amendment No. 517 or amendment No. 518 is accepted. It would allow an administrator to obtain the required consent at a creditors' meeting where consent cannot be obtained from 50 per cent. of all creditors by value, because one or more large creditors are apathetic or cannot be contacted.
Those are three different ways of approaching the same problem.
Amendment No. 467 would extend the period for the appointment of an administrator under paragraph 75, schedule 16 from three months to six months. The Law Society of Scotland and the Institute of Chartered Accountants of Scotland support the amendment. They have expressed concerns that three months is too short for administration to be completed. The Law Society in particular refers to the sale of assets such as heritable property, which may take substantially longer than the three months that the timeframe provides. I can think of several erstwhile colleagues who would have regarded a conveyancing transaction of three months as one that was conducted with indecent haste. They might find difficulty even with six months. The alternative is that the administrator will be required to obtain consent or leave from the court to remain in office, which may lead to further costs and the diminution of the return to the creditors. Given the length of time at issue, I can see no reason in principle why such unnecessary costs should not be avoided, if possible.
On amendments Nos. 468 and 469, administration may, for the best of reasons, occasionally take longer than three months to complete. On occasions, it may be virtually impossible to determine exactly how long it will take. It will be open to obtaining the consent of the creditors to extend the period of administration. Thereafter a return to court is required.
The purpose of the amendment is that the period of any such extension to be granted by the court might relate to a specific event, such as the sale of heritage or perhaps the conclusion of litigation proceedings. That
would obviously put creditors in a much better position. There would also be substantial penalties to several creditors if the claims were left unresolved at the conclusion of an administration.
I offer the amendments as probing amendments, and I shall be interested to hear the Minister's views.
The hon. Member for Eastbourne seemed determined to cover all the bases, so I shall speak to amendments Nos. 423, 467, 517, 468, 469 and 518. The amendments seek to remove the automatic end of administration after a period of three months and to leave the administration procedure to continue indefinitely, as in amendment No. 423. Alternatively, they seek to extend the period to either six months, as in amendment No. 467, or 12 months, as in amendment No. 517, subject to a further extension that could be agreed by the court indefinitely, as in amendment No. 468, or by creditors' consent, either indefinitely, as in amendment No. 469, or by 12 months, as in amendment No. 518. We covered the ground in detail this morning in the context of earlier amendments. The same arguments clearly apply.
Amendment No. 424 seeks to provide that a creditors meeting can agree an extension to the administrator's term of office. The Bill already provides for 50 per cent. of the creditors, by value, to extend the administration, although I recognise that it may on occasion be difficult to meet that threshold without incurring disproportionate costs. That would be the case when, for example, there was a large number of creditors, or when one or more large creditors did not respond or could not be contacted.
Paragraph 56 allows for anything that needs to be done at a creditors meeting to be done by correspondence between the administrator and the creditors. I do not think that a formal obligation to hold a meeting is required, but if Opposition Members will not press the amendment, I will agree to reflect on the points raised and return to the matter, if necessary, on Report.
Finally, I want to touch on amendment No. 425. The Bill already requires an administrator to notify the court, the registrar of companies and the company's creditors when the administration is concluded.
On a point of order, Mr. Beard. I do not think that we have got that far yet. [Hon. Members: ''Yes, we have.''] I assumed that amendment No. 425 was in its own group, so I did not speak to it. Do you want me to do so?
I would prefer to allow the Minister to continue his remarks.
If it would be easier and more convenient for the amendment to be spoken to, and for me then to respond, I would be more than happy.
I would be interested to hear the Minister respond to something that I had not said. I have a short point. The mistake was entirely mine, as I had failed to notice the plus sign between the amendments. I wonder why.
The amendment is important, because practitioners and the CBI back it. Notice of cessation must be given to the appointer and the company, to enable them to take any action that they consider appropriate. That is my point in a nutshell.
With spontaneity, I can say that we will resist amendment No. 425, which will come as no surprise. The Bill already requires an administrator to notify the court, the registrar of companies and the company's creditors when the administration is concluded. The administrator's duty is to the creditors of the company, and the Bill's proposals will reflect that. In cases when the administrator was appointed by the company or directors, normal working practice would require the administrator to notify those persons that the objective of the administration had been achieved. I therefore ask the hon. Gentleman not to press the amendment.
For clarity, I should say that we seek to resist amendments Nos. 423, 467, 517, 468, 469 and 518. I have given an undertaking to consider and, potentially, to address on Report amendment No. 424, but I resist amendment No. 425. I ask the hon. Gentleman to withdraw the amendment.
I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
I beg to move amendment No. 546, in page 263, line 14, after 'that', insert
'the company has no secured creditors or that'.
With this it will be convenient to take amendment No. 547, in page 263, line 17, leave out 'has been or'.
Government amendment No. 497.
Amendment No. 548, in page 263, line 28, after 'copy', insert
'to the person or persons who appointed him to the company and'.
Government amendment No. 498.
Amendment No. 426, in page 263, line 34, leave out '98' and insert '84(1)(c)'.
Amendment No. 550, in page 263, leave out lines 36 to 39 and insert
'and
(c) the administrator becomes the liquidator of the company and continues in office unless and until another person is appointed liquidator by the creditors at a meeting held in the prescribed manner and within the prescribed period.'.
Government amendment No. 499.
Amendment No. 546 is short in compass and intends simply to avoid pointless theoretical debate.
On amendment No. 547, there is no point in a creditors' voluntary liquidation unless some distribution is to be made to unsecured creditors. The amendment also brings the position in England and Wales into line with that for Scotland, in paragraph 82(2)(b).
Amendment No. 548 is a technical amendment.
There is another reason why shareholders may want a voluntary arrangement. For many, the aura that surrounds bankruptcy is unfavourable, so even if the company does not have significant assets or anything to make a distribution with, people may fund the company so that it can be wound up on a voluntary rather than a compulsory basis.
I am grateful to my hon. Friend, who speaks from experience; professional experience, of course. I do not want unwittingly to smear him, even if privilege applies to everything that I say.
On amendment No. 548, notice of the conversion to a liquidation must be given to the appointer to enable him to take any action that he considers appropriate to protect his interest. For that matter, the company also needs to be notified that it is now in liquidation. One would have thought that that would have been painfully obvious.
Amendment No. 426 is a technical amendment, tabled again with the support of the CBI. Section 98 relates to the first creditors' meeting for the creditors' voluntary liquidation, not to the winding-up resolution governed by section 84.
Finally, I turn to amendment No. 550, which is also a technical amendment. As things stand, sub-paragraph (6) can be interpreted as meaning that the administrator does not become liquidator until it is known that the creditors are not going to appoint someone else. The amendment would avoid that problem, mirroring the existing section 136(3) of the Insolvency Act 1986, under which the official receiver automatically becomes liquidator of a company in compulsory liquidation unless and until someone else is appointed.
I shall speak first to amendment No. 546.
One condition for moving from administration for creditors' voluntary liquidation is that
''each secured creditor . . . has received a payment in respect of his debt and is not likely to receive any significant further payment in that respect''.
It stands to reason that the condition would automatically be satisfied if the company did not have any secured creditors, so the amendment is unnecessary and I ask him to withdraw it.
I turn next to amendment No. 547. The primary purpose of moving a company from administration to creditors' voluntary liquidation, notwithstanding the observations of the hon. Member for Huntingdon, is to enable the administrator to make a distribution to unsecured creditors. Therefore, the only relevant condition in relation to unsecured creditors is whether the administrator will make a distribution to them in the future. I agree with the hon. Members that the reference to distribution already having been made appears inappropriate in this context, but I would like the opportunity to consider further how to deal with it. Therefore, I ask the hon. Gentleman to withdraw the amendment on the basis that I shall return to it later.
Amendments Nos. 497 and 499 would provide that if an administrator wants to move a company from
administration and into creditors' voluntary liquidation or dissolution, he or she will have to file a copy of the notice given to the registrar of companies with the court. That will complete the court records for the administration that will have been opened when the procedure began.
Amendment No. 498 simply corrects a reference to a sub-paragraph number in paragraph 82(5). I ask hon. Members to note that the reference to sub-paragraph (4) should be to sub-paragraph (3). I therefore ask the Committee to support amendments Nos. 497, 498 and 499.
Turning to amendment No. 548, the Bill already requires an administrator to notify the court, the Registrar of Companies and the company's creditors when the administration is concluded. The administrator's duty is to the creditors of the company and the Bill's proposals will reflect this. In cases where the administrator was appointed by the company or directors, normal working practice would require that the administrator should notify those persons that the objective of the administration has been achieved. I therefore ask the hon. Gentleman not to press the amendment.
Amendment No. 426 seeks to amend a reference to the Insolvency Act 1986 that concerns the date on which a company enters creditors voluntary liquidation. Paragraph 82 allows for a company to be wound up as if a resolution for voluntary winding-up under section 98 were passed. However, section 98 relates to the first creditors meeting in a creditors voluntary liquidation. Section 84(1)(c) specifically deals with the company passing the resolution to place the company into creditors voluntary liquidation. I therefore agree to consider this amendment.
Having considered the alternative wording proposed in amendment No. 550, I cannot see that it makes any material difference to the meaning of the provision. Both the existing provision and the proposed amendment provide the creditors of the company with the opportunity to nominate someone other than the administrator to serve as the liquidator; and both provide that if this is not done, the administrator will become the liquidator. Given that there appears to be no material difference between the effect of the provision at present and as amended, the amendment is unnecessary. I therefore ask Conservative Members not to press the amendment.
On the basis of the Minister's assurances, I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Amendments made: No. 497, in page 263, line 28, leave out 'send a copy' and insert—
'(a) file a copy of the notice with the court, and
(b) send a copy of the notice'.
No. 498, in page 263, line 30, leave out '(4)' and insert '(3)'.
No. 499, in page 264, line 4, leave out 'send a copy' and insert—
'(a) file a copy of the notice with the court, and
(b) send a copy of the notice'.—[Mr. Alexander.]
I beg to move amendment No. 551, in page 265, leave out lines 36 and 37 and insert—
'(2) The creditors' committee shall be entitled to appear on any application made in reliance on sub-paragraph (1)(b) to (d).'.
With this it will be convenient to consider amendment No. 427, in page 265, line 37, at end insert—
'or where the creditors committee fails to apply under sub-paragraph (1)(a) within seven days following the event specified in paragraph 89'.
Amendment No. 551 would make the role of the creditors committee clearer. This is needed in case a creditors committee cannot make a decision quickly because, for example, its members are widely scattered or it is deadlocked on some issue. The ability to appear on the applications should still give sufficient protection to the committee.
Amendment No. 427 is designed to preserve the ability of the company directors and creditors to act should the creditors committee fail to do so. Creditors committees have not historically been separately represented under our law and committees will be unused to acting independently. The CBI takes the view that there is a real risk that a committee, even when empanelled, might not take the initiative. That could lead to the affairs of a company drifting dangerously. I commend both of the amendments, which are of a fairly technical nature, to the Committee.
Amendments Nos. 427 and 551 are of a technical nature and deal with situations in which there is a creditors committee and an administrator dies, resigns, is removed from office by the court or ceases to be qualified to act as an administrator. Conservative Members appear to be concerned that the committee might not make an application to the court to appoint a replacement administrator. However, as a creditors committee is appointed to represent the interests of all creditors, it is difficult to imagine that such a committee would fail to appoint a replacement administrator if the previous administrator were unable to continue. Our intention is that paragraph 94(b) should provide for the court to replace an administrator on the application of the creditors committee, company, directors, creditors or a joint administrator who remains in office. That would, of course, include any instance where a creditors committee did not appear to be taking the necessary steps to replace an administrator.
I accept, however, that the drafting of the paragraph may not be clear enough, and parliamentary counsel has been asked to reconsider it and to prepare any necessary Government amendment. In the circumstances, I agree to further reflect on the matters that have been raised.
I should clarify that the paragraph that I mentioned largely replicates the effect of section 13(3) of the Insolvency Act 1986 on the replacement of an administrator, but, in the circumstances, I shall further reflect on the matter. In the meantime, I ask the hon. Gentleman not to press the amendment.
I am grateful to the Minister for taking the trouble to explain his thinking on the amendments. I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Amendments made: No. 500, in page 267, line 3, leave out 'dies, because he vacates office or' and insert
'vacates office by reason of resignation, death or otherwise, because he'.
No. 501, in page 267, line 16, leave out 'dies, because he vacates office or' and insert
'vacates office by reason of resignation, death or otherwise, because he'.—[Mr. Alexander.]
I beg to move amendment No. 502, in page 267, line 38, leave out 'be disregarded in determining whether a contract is adopted' and insert
'not be taken to amount or contribute to the adoption of a contract,'.
With this we may discuss the following: Government amendments Nos. 503 and 504.
Amendment No. 552, in page 268, leave out line 6.
Government amendment No. 505.
Amendment No. 502 clarifies paragraph 98(5)(a) to make it consistent with the provisions in section 19(6) of the Insolvency Act 1986. The intention behind that section is to provide that the administrator will not be taken to have adopted contracts of employment as a result of anything done or not done within the first 14 days of his or her appointment.
Paragraph 98(5)(a) is intended to replicate that provision, but it has been suggested that it is too broad as currently drafted. It states that no account shall be taken of the administrator's actions in the first 14 days in determining whether a contract is adopted. That could be taken to mean that actions specifically taken by the administrator to terminate contracts of employment would not have effect. That is not our intention.
Amendment No. 502 will make it clear that the administrator is not to be taken to have adopted a contract of employment by reason of anything done or not done within 14 days of his or her appointment, which is the case at present.
Amendments Nos. 503 to 505 are simply technical amendments, which change the terms ''leave'' and ''an entitlement'' to ''holiday'' in paragraph 98(6) to make it consistent with the existing provision in section 19(9) of the Insolvency Act 1986, which the paragraph replicates. I therefore ask hon. Members to support the amendments.
On amendment No. 552, paragraph 98(6) defines what constitutes ''wages or salary'' for the purpose of determining liabilities arising out of certain contracts of employment. It replaces section 19(9) of the Insolvency Act 1986, and is intended to have the same effect. We are aware that the scope of the phrase
''a sum payable in lieu of an entitlement''
is more ambiguous than the existing provision, and I have tabled an amendment to ensure that the paragraph is consistent with the provision that it replaces. I therefore ask the hon. Gentleman not to press the amendment.
I am happy not to press the amendment in my name.
Amendment agreed to.
Amendments made: No. 503, in page 268, line 1, leave out 'leave' and insert 'holiday'.
No. 504, in page 268, line 3, leave out 'leave' and insert 'holiday'.
No. 505, in page 268, line 6, leave out 'an entitlement' and insert 'holiday'.—[ Mr. Alexander.]
I beg to move amendment No. 584, in page 271, line 31, after 'make', insert
', in or towards the satisfaction of the debt secured by the floating charge,'.
With this it will be convenient to discuss Government amendments Nos. 585 and 586.
Amendments Nos. 584 and 586 deal with the order of priority of payments. The law of receivership in Scotland has developed separately from its English and Welsh counterparts, and the order of priority of payments that an administrative receiver can make to creditors is set out in primary legislation. The purpose of the amendments is to ensure that the current situation is replicated by incorporating into the primary legislation the fact that any payments that an administrator makes to a floating charge holder in Scotland must be consistent with the order of priorities for such payments and in respect of the relevant floating charge.
Amendment no. 585 simply corrects an incorrect reference in paragraph 113(2). The reference to section 176 should be to 176A. I ask the Committee to support the amendments.
Amendment agreed to.
Amendments made: No. 585, in page 271, line 36, leave out '176(2)(a)' and insert '176A(2)(a)'.
No. 586, in page 271, line 42, at end insert—
'114 In Scotland, the administrator in making any payment in accordance with paragraph 113 shall make such payment subject to the rights of any of the following categories of persons (which rights shall, except to the extent provided in any instrument, have the following order of priority)—
(a) the holder of any fixed security which is over property subject to the floating charge and which ranks prior to, or pari passu with, the floating charge,
(b) creditors in respect of all liabilities and expenses incurred by or on behalf of the administrator,
(c) the administrator in respect of his liabilities, expenses and remuneration and any indemnity to which he is entitled out of the property of the company,
(d) the preferential creditors entitled to payment in accordance with paragraph 65,
(e) the holder of the floating charge in accordance with the priority of that charge in relation to any other floating charge which has attached, and
(f) the holder of a fixed security, other than one referred to in sub-sub paragraph (a), which is over property subject to the floating charge.'.—[Mr. Alexander.]
Schedule 16, as amended, agreed to.