Corporate Insolvency and Governance Bill

Debate between Lord Fox and Lord Bourne of Aberystwyth

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

[Lord Bourne of Aberystwyth (Con) [V]]

My Lords, I refer the House to my interests as published in the register. I thank the Minister for introducing this legislation, which has many valuable facets to it. I also thank the Law Society for its helpful briefing. I will particularly talk about the amendments that relate to the independence of the monitor, which are extremely important. The point has been well made that this is a simple matter to put right, and I hope that the Minister has been listening. It is clearly right that the monitor should be independent of the company. That runs to the very heart of company law.

I also very much welcome the amendment of the noble and learned Lord, Lord Hope of Craighead, relating to the provision of a list of creditors from directors for a monitor to work from. That is necessary for ensuring that the moratorium process works effectively, and deserves our backing too. I also welcome Amendments 42 and 28, which again relate to the independence of the monitor and ensuring that there are no conflicts of interest—matters that are easily put right, and I hope that we can do that.

It has been a long debate on this group of amendments so I will not detain the Committee long, but I share with my noble friend Lord Hodgson of Astley Abbotts a concern about the two different halves to this legislation. There is the half—no doubt very important—relating to insolvency procedures, which centres on the moratorium and is very welcome, and then there is the other half, which has an urgency about it and which we need to push through very quickly to protect businesses during the Covid crisis. It is as if we have two halves of different cars welded together, as might have been the case with Del Boy and Rodney in “Only Fools and Horses”, with predictable consequences. That is not to say that it cannot be put right, but we need to push through some important amendments to ensure that this works effectively. I hope that the Minister has been listening and will take on board some of the important points made as we have progressed through this group and, no doubt, as we continue throughout the other groups.

[Lord Fox (LD)]

My Lords, I draw noble Lords’ attention to my interests as set out in the register. The noble Lord, Lord Stevenson, in his understated way, called this a wide group of amendments and we have heard a wide and knowledgeable group of Peers speaking to it. I agree with the noble Viscount, Lord Trenchard, that we need proper scrutiny of this Bill. Whether we are here virtually or physically, cramming so many amendments into one group is symptomatic of trying to rush this Bill through. That will have unintended consequences, whether the noble Baroness, Lady Neville-Rolfe, believes it or otherwise. We are suffering from undue haste in trying to do in one day what should have been done over at least two or three days.

I will speak to a small number of amendments. On Amendment 10, the noble Lord, Lord Stevenson, queried 20 days and suggested 30 days. My question for the Minister is: why 20? What was the science and evidence that suggested that 20 was correct? The noble Lord, Lord Leigh, spoke about the courts being busy. Well, one way of relieving the courts of work would be to have a slightly longer period, because that would mean that the monitor would not have to go back to the courts so often to renew the process. Why 20 days and why not 30, or indeed some other number of days?

Amendment 2, to some extent Amendment 1 and certainly Amendment 28 ask the perfectly reasonable question of what the monitor’s role is. What is the correct qualification for the monitor? It is perfectly reasonable in a Bill such as this, with the role of monitor so central to this process, that we understand what that monitor is and who it might be. I look forward to the Minister’s comments on that.

This group, among others, contains a whole load of amendments that address what I call the creditor waterfall. Amendment 21 and, in different ways, Amendments 25 and 40, talk about the role of the banks and financial institutions and seek to restrain the advantage that those institutions can get from their special position within the creditor landscape. It is not in the Government’s interests to continue to allow these organisations the freedom of the remaining resources of a failing business. What was going through the mind of the Government when those decisions were made to set out this level of access and give financial institutions the run that they seem to get from the Bill?

My noble friends Lady Kramer and Lady Bowles and others talked about the role of small and medium-sized businesses, and Amendment 22 adds small entities to the list of those with preferential treatments. Amendments 37 and 40 call for a review after 18 months of how a moratorium is dealing with SMEs. This is an entirely different review from the other reviews that crop up on later groups. It is very much about how this is really affecting businesses. I am proud to put my name to Amendments 98 and 99, proposed by my colleague and noble friend Lady Bowles, which makes wages and salaries rank alongside continuing supplier and not below them. That seems entirely reasonable and I thought that she set that out very well.

All these issues set up the central point: the Bill is not a fully formed piece of legislation. The Government have recognised that, as my noble friend Lady Bowles pointed out, by granting themselves an almost unprecedented ability to rewrite it. They know that it is not the finished article. We will have an opportunity in later groups of amendments to discuss a better way of doing that and a way of giving Parliament the power to assess and possibly rewrite the rules, but I look forward to the Minister’s reply.