Clause 244 - Liquidator's powers

Enterprise Bill – in a Public Bill Committee am 10:45 am ar 14 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

Again, a small point has been raised with me by PricewaterhouseCoopers, which, among other things, is a well-known practitioner in insolvency matters. It suggests that the clause appears to be intended to overcome problems caused by a 2001 Court of Appeal decision involving re Floor Fourteen Ltd. One or two members of the Committee may not be as familiar as they would like with that decision, so I shall explain that it was held in that case that the costs of pursuing an action to recover money from directors for wrongful trading could not be recovered by the liquidator as a liquidation expense.

Photo of Nigel Waterson Nigel Waterson Ceidwadwyr, Eastbourne

I assume that the hon. Gentleman is not describing his party's policies, but is commenting on the decision or the purport of it.

The same principle applies to other types of action related to pre-liquidation transactions and events. That can make it difficult for liquidators to pursue such actions and it reduces the likelihood that money will be recovered for the benefit of creditors. Incredible, as the hon. Gentleman says, is the word that springs to mind. I presume that there was no attempt to appeal to the House of Lords, which puzzles me slightly.

The clause attempts to overcome the problem by specifically including the pursuit of such actions in the powers that a liquidator can exercise, with the consent of the liquidation committee. PWC states that, unfortunately,

''So far as we can see this does not overcome the problem, as the difficulty does not lie in the scope of the liquidator's powers but in the definition of liquidation expenses in the Insolvency Rules 1986.''

Although we understand why the Government are trying to deal with the problem caused in re Floor Fourteen Ltd., the clause does not do the job. The matter can presumably be approached through regulation, and the Under-Secretary may be thinking along those lines. In the real world of insolvency practitioners, the point is significant. It seems important to me, and it should be dealt with.

Photo of Miss Melanie Johnson Miss Melanie Johnson Parliamentary Under-Secretary, Department of Trade and Industry

In terms of the Cork recommendation, I confirm that it will be possible to pursue antecedent recoveries subject to sanction by the creditors. Under a recent decision, the Lewis case, a liquidator may utilise funds held in a liquidation to pursue antecedent recoveries without sanction. The clause will ensure that the decision to use funds to pursue such actions lies with creditors, not the trustee.

The hon. Gentleman raises the subject of liquidators recovering costs. The Insolvency Rules 1986 are being amended to allow a liquidator to recover his costs when taking such actions.

Question put and agreed to.

Clause 244 ordered to stand part of the Bill.