Corporate Insolvency and Governance Bill — House of Lords, 2020-06-09
Topic: Domestic Commerce
Monroe Edward Palmer (Liberal Democrats, Centre to centre-left): My Lords, a Bill to seek to deal with temporary conditions, at the same time as permanent reforms, could be a case of "legislate in haste, repent at leisure". Is it prudent to mix permanent and temporary measures? What plans are in place for the Insolvency Service to monitor the effectiveness of this legislation In the current situation, the underlying problem to be prevented is a tsunami of liquidations. In the 1990s, there was such a situation. Banks realised the need to ensure that, in a liquidation, there was a co-ordinated sale of assets. Is such collaboration in place, to forestall fire-sale discounts or the mass selling of assets Under the Bill, an insolvency practitioner would oversee the moratorium, acting as a monitor, leaving the directors to run the business for a while. If this is not successful, a liquidator is then appointed. I would welcome details on the connection, if any, between the monitor and the liquidator, and some expansion on the questions of the noble Lord, Lord Mendelsohn, with regard to conflict I am concerned that, as I perceive it, the prime concern of an insolvency practitioner is his or her own fees, which are still at the top of the preferred creditors list. I also have concerns about the liability of the monitor during proceedings, as it appears to be a high-risk role. In the event that insurance becomes disproportionately expensive, or difficult to obtain, the Government should consider whether to include some limitations of liability. There are further concerns over the requirement for a monitor to obtain bonding, similar to other insolvency appointments, even though, as noble Lords will appreciate, the monitor does not control the assets of the company I am concerned at the changes to priority status for certain creditors, and in particular the reintroduction of HMRC’s priority status. This matter has been raised by others, including my noble friends Lady Burt and Lady Kramer. Parts of the Finance Bill 2020 undermine efforts to support businesses in the Bill before us. The proposals make HMRC a secondary preferential creditor, thus Clauses 95 and 96 of the Finance Bill should, in the light of the insolvency Bill, be withdrawn. Reintroducing HMRC preference seems to me to be pulling in the opposite direction from taxpayer support being provided by the Government at the current time to help businesses survive. This impacts on pensioners, suppliers, customers and lenders. Trade creditors and floating charge creditors could be forgiven for thinking: what has HMRC ever done for me There will be a substantial number of cases where a company is unlikely to be rescued as a going concern, but where part of the business can carry on and the employment it supports be sustainable, if sold off to another company through the administration and insolvency procedure. It is not clear why the moratorium should not be available in these cases Companies of a certain size are excluded from the moratorium, and this excludes many private companies with many employees and supply chains. Will the Minister provide further information underpinning this decision, to enable parliamentary scrutiny, or consider extending the moratorium to these companies that are not covered by this Bill?