Corporate Insolvency and Governance Bill

Debate between Lord Monks and Lord Leigh of Hurley

Committee stage & Committee: 1st sitting (Hansard) & Committee: 1st sitting (Hansard): House of Lords
Tuesday 16th June 2020 Lords Chamber

[Lord Monks (Lab) [V]]

My Lords, I do not wish to speak at this stage.

[Lord Leigh of Hurley (Con) [V]]

I will speak to Amendments 12, 13, 17, 18, 30 and 31, all of which are mine. Essentially, they make the same point, but I had to table several amendments to the Bill to cover it. The point is to allow an extension of the moratorium where the rescue of the business, as opposed to the company, is likely. I draw the attention of your Lordship’s House to my register of interests, which includes being deputy chairman of finnCap, a stockbroker, and senior partner of Cavendish Corporate Finance, which specialises in selling businesses. Unusually, I am speaking to an area in which I have some limited expertise, particularly in selling businesses.

I add to the remarks of the noble Lord, Lord Hendy, that private equity firms, banks and others do spread their risk, and insolvency is a devastating experience for the owner of a business, who may have spent years building it up and invested all their family wealth into it. They too need as much protection as possible.

At the moment, there is constant reference throughout the Bill to “the company”, but frequently, if not in the vast majority of cases, the actual limited company, or plc company, will not survive—there is simply no possibility—and there will be no return to the shareholders or equity at all. However, the actual business itself might well survive. For example, in the retail sector, many businesses trade from shops. The companies that have the leases with the landlords will disappear, but the businesses trading in those shops will, hopefully, carry on. Typically, they may be sold to a third party but, to do that, the directors or monitor will need time to negotiate a transaction that preserves the business and the jobs. I thank the noble Lord, Lord Mendelsohn, for inviting me to amplify the amendments, but what they are saying is pretty simple. In many instances, the business that is owned by the company is viable and likely to carry on, but there is no chance of the company so doing. The amendments in my name seek to address this.

Amendments 12 and 13 refer to the situation where a director wants to extend the moratorium with creditor consent, and Amendments 17 and 18 to where the directors apply to the courts. I share the concern of other noble Lords that the courts are going to be very busy as a result of the Bill, and I hope that sufficient resources will be given to them. Again, where the directors apply to the courts, the courts will see that the business may well carry on, even if the company is not able so to do. This will then allow the courts to instruct the directors to carry on the moratorium.

Amendments 30 and 31 refer to the circumstances where the monitor is in charge. I will make a few comments about the monitor in a minute. The Bill states that

“the moratorium is no longer likely to result in the rescue of the company as a going concern”.

This ignores the possibility that the business might well be rescued as a going concern. It is particularly important that the monitor is a person who is able to see that viability and implement it. It would be tragic if the moratorium ends for all the wrong reasons.

I support the noble Lords, Lord Stevenson and Lord Hodgson of Astley Abbotts, in emphasising the importance of who the monitor is. The noble Lord, Lord Stevenson, quite rightly made the point that it need not necessarily be a chartered accountant or an insolvency practitioner. It would be great if the legislation allowed the flexibility for a turnaround professional to be appointed as a monitor, albeit with the appropriate protections, as they really do know what they are talking about in enabling a business to carry on afterwards. The story from the noble Lord, Lord Hodgson, about the investigating accountants telling the directors that they would be back on Monday to carry out receivership is chillingly true; I have seen it in practice. I have also seen much better examples, where the investigating accountants have been told by the bank that under no circumstances will they be appointed as the receiver, or in our case monitor. So they are truly independent and are working to try to ensure that the business carries on, as opposed investigative accountants being appointed, who know that they might be appointed as the receiver, with subsequent huge professional fees.

It is vital that we try to ensure that the monitor is independent not just at the time of appointment, as these amendments suggest, but subsequently, and is not appointed as a receiver without proper investigation that their actions have been in the interests of the business. I will not amplify this point any more but will simply quote from the Insolvency Practitioners Association, which has said:

“Expanding the definition”,


as I have suggested,

“will enable monitors to more broadly assist businesses, working with their owners, stakeholders and directors to give them a greater opportunity to survive the economic strictures of Covid-19 responses”—

which is the purpose of the Bill. Without the amendments I have tabled, the Bill will be heavily emasculated.

Trade Union Bill

Debate between Lord Monks and Lord Leigh of Hurley

Wednesday 10th February 2016 Lords Chamber

[Lord Leigh of Hurley]

My Lords, I referred earlier to my interests in the register. I further declare that I am a donor to a party and regularly opt in—not as regularly as my party would like, but at least once a year I choose to opt in voluntarily.

There are a number of issues which I want to address, not least those raised by my noble friends on this side of the Committee. The opt-in is discussed in the manifesto on pages 19 and 49, and it is clear from reading those two pages—which are completely separate from the pages to do with party funding—that this is a manifesto pledge.

The noble Baroness, Lady Smith, made the point that party funding has to be taken as a package and, if it were a matter of party funding—which I do not believe it is—it would be inappropriate to cherry pick. Well, up to a point. For example, in 2000, the PPERA imposed a condition on companies for shareholder approval before donations could be made and that was a unilateral act. As a result, donations from public companies to all political parties have pretty much dried up. Likewise, in the Labour Party manifesto, there were a number of commitments to change the way parties were funded, including putting on caps. If Labour had won the election, I am sure that it would have wished to implement its manifesto. We would have put a contrary argument but, none the less, we would have accepted that the manifesto commitment of the Labour Party would be enacted. So it is not quite as clear as we have been led to believe.

I believe that this is all about transparency. I have read some of the proceedings of the Select Committee. It was quite interesting to read Mr McNicol’s submissions where he reveals that, of the £22 million raised in total by political funding, some 54% does not go to Labour nor to any political party. This begs the question, where does 46% of the £22 million go? I have tried very hard to find the answer within political fund accounts, but we do not know. It is not purely about money to political parties; it is for political activities. Within UNISON’s accounts, it states that it is up to the executive committee to determine where that money is spent. So there are wider implications than just political funding—it is about political activities.

[Lord Monks]

I do not know whether I am helping or not, but the unions do not necessarily spend all their political fund money on the Labour Party. New ones have come in since 1984 and, because of the helpful legislation by the noble Lord, Lord King, on ballots, none of them is affiliated to the Labour Party. Even the affiliated unions spend only a proportion of their money on the Labour Party.

[Lord Leigh of Hurley]

Indeed, as I have said. We do not know where a very large proportion of it—46%—goes; it goes on political activity.

[Lord Collins of Highbury]

The trade union movement in this country is one of the most highly regulated in the world. It is required to submit an annual return to the Certification Officer. Every single penny that is held in trust of the membership is accounted for in that annual return. Every single penny is also recorded in the published annual report. This is far more transparent than any private company that donates to the Conservative Party. As I said, that is money that it may spend on political purposes. It does not have to. It could be for a campaign for civil liberties or voter registration, or a campaign against racists and fascists—and for safety at work, and lots of other things.

[Lord Monks]

Or supporting a Conservative Member of Parliament.

[Lord Leigh of Hurley]

I thank you. I did actually read the Certification Officer’s report this afternoon. It details exactly income and expenditure, union by union, but it does not specify exactly where the money goes.