Administration (Restrictions on Disposal etc. to Connected Persons) Regulations 2021

Lord Foulkes of Cumnock Excerpts

Monday 22nd March 2021 Lords Chamber

[Lord Foulkes of Cumnock (Lab Co-op) [V]]

My Lords, I too am grateful to the Minister for his, as usual, helpful introduction. Like him, I fear that we will be facing many more insolvencies—not just because of the pandemic, as he indicated, but as a result of the many problems arising from Brexit—so these regulations are timely.

I will confine myself to a few questions, which I hope the Minister can respond to in his reply. First, can he tell us whether all kinds of companies are covered by this provision? I understand from the Explanatory Memorandum that it extends to small businesses but are all types of businesses included? Specifically, will football clubs, some of which are currently in great financial difficulties, be included? As others have done, I also want to ask about the evaluators, who will be given significant responsibilities. As their trade body R3—as well as noble Lords in this debate—has said, it would be helpful to know what qualifications will be required to act as an evaluator. The Minister gave us some examples of professions but he did not describe what specific qualifications they should have. If, for example, they are businesspeople, will they be excluded if they have themselves been involved previously in an insolvency?

How will they all be assessed for honesty and integrity prior to their appointment? Why will there not be a central register of evaluators, or indeed a body responsible for any training and registration and checking their operational effectiveness and reliability? Will the Government consider a register of approved evaluators being maintained by the Insolvency Service, as suggested by R3? However well qualified, an evaluator will not have the final say. If an administrator does not accept the decision of an evaluator that the “case is not made”, all he has to do is “provide an explanation” to allow him to proceed anyway. Does this not make the evaluator’s role effectively impotent?

The Minister helpfully reminded us that the definition of “connected persons” is described in legislation. However, how will the proposed procedure prevent some form of insider advantage being given to connected persons? Can the Minister also tell us how the interests of creditors will be balanced against speed in this procedure? Sometimes their interests can be forgotten in the apparent need for a quick resolution. Finally, and perhaps predictably, I want to ask about Scotland. Here, insolvency is partly devolved. Can the Minister tell us what discussions have taken place to ensure that these regulations are in fact consistent with Scots law, and can he give the House an assurance that this has been accepted by the devolved Administration?

Assuming that the Minister can give us all satisfactory answers, I agree with others that we should approve these regulations.