New clause 10 - Application of insolvency law to foreign company

Enterprise Bill – in a Public Bill Committee am 9:45 am ar 16 Mai 2002.

Danfonwch hysbysiad imi am ddadleuon fel hyn

'(1) The Secretary of State may by order provide for a provision of the Insolvency Act 1986 (c.45) to apply (with or without modification) in relation to a company incorporated outside Great Britain.

(2) An order under this section—

(a) may make provision generally or for a specified purpose only,

(b) may make different provision for different purposes, and

(c) may make transitional, consequential or incidental provision.

(3) An order under this section—

(a) must be made by statutory instrument, and

(b) shall be subject to annulment in pursuance of a resolution of either House of Parliament.'. —[Miss Melanie Johnson.]

Brought up, and read the First time.

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

I beg to move, That the clause be read a Second time.

The new clause provides a power for the Secretary of State to extend the application of the provisions of the Insolvency Act 1986 to companies incorporated outside Great Britain. Under current legislation, it is unclear whether a company incorporated outside Great Britain—apart from companies from certain Commonwealth countries, whose courts might request the assistance of the UK courts in insolvency matters—can make use of company voluntary arrangements or the administration procedure. Its only option, probably, is winding up as an unregistered company.

We believe that there is a strong case for allowing foreign companies to make use of the rescue provisions of the 1986 Act, particularly in today's business environment, in which many foreign companies operate in Great Britain and have assets and creditors here. The new clause will allow the Secretary of State, following consultation, to extend the rescue provisions and other corporate insolvency proceedings of the Insolvency Act to such companies.

Photo of Nigel Waterson Nigel Waterson Ceidwadwyr, Eastbourne

The provision sounds eminently sensible. I have just one query: to what extent is the provision based on or related to any international convention? Is a reciprocal arrangement either in place or envisaged? In the increasingly globalised business world, multinational companies face a range of insolvency regimes. I do not want to open that can of worms at this stage, save to say that one can imagine the possible complexities of the insolvency of a large corporation that straddles various countries or even

continents—hence my interest in whether the measure is to be linked with reciprocal arrangements internationally.

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

The answer is no.

Question put and agreed to.

Clause read a Second time, and added to the Bill.