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Legislative Reform (Insolvency) (Miscellaneous Provisions) Order 2009

My Lords, I am being shadowed for the day by a graduate intern, Angela Wynne. I am not sure whether she should be shadowing me or the noble Lord, Lord Hunt. This is an attempt to get her name into Hansard. I shall start by putting the proposals in this legislative reform order into the context of what we are trying to do as a Government and as a department. We have been working determinedly over the past year to provide real help for businesses, including advice, access to finance and tax relief, to support them through the downturn and to safeguard jobs. The reforms today give certainty to the business climate by simplifying an essential part of business law so that businesses can take risks and concentrate on what they do best—creating wealth and jobs. That is why we are reforming the UK insolvency regime, so that it reflects modern business practices and strikes the right balance between the respective interests of debtors and creditors. The order makes amendments to the Insolvency Act 1986 and forms part of a package of measures being taken to modernise the insolvency legislation. Changes to the regime for publicising insolvency events were implemented in April of this year and some of those changes were facilitated by an earlier legislative reform order. This next phase of amendments, along with parallel changes being made to the insolvency rules 1986, will substantially change the law. These changes will be implemented next April and thereafter a consolidation of the insolvency rules will be undertaken to make the legislation easier to use. That is planned for April 2011. My officials have worked very closely with insolvency stakeholders as we have developed these proposals, and I am very grateful for the valuable contributions that those stakeholders have made. The purpose of the order is to reduce the cost of administering insolvency cases and thereby increase the amount of money that can be returned to the creditors. It will do this by amending the Insolvency Act 1986 to enable new and more efficient ways of carrying out certain actions within insolvency procedures and to remove requirements to carry out unnecessary actions. The provisions in this order will operate alongside changes to the Insolvency Rules 1986, which are also being modernised. The changes will come into effect at the same time as this order. There are seven proposals in all. They are: to allow insolvency office-holders to convene meetings as part of their conduct of insolvency cases other than by attendance at a specific venue; to make communication between insolvency office-holders and creditors more flexible, such as by allowing the use of websites; to make it explicit that electronic communication is permitted within insolvency procedures; to remove the requirement for certain documents to be sworn by affidavits and replaced with less burdensome requirements for such documents to be verified by a statement of truth; to remove a statutory requirement on voluntary liquidators to summon annual meetings for the purpose of laying an account of their actions over the preceding years—instead, the liquidators will be required to send out progress reports; to remove the need for certain documents in individual voluntary arrangements to be filed at court; and, finally, to simplify the procedures relating to realisation of certain assets in bankruptcy and liquidation. Perhaps the most far-reaching of these seven proposals are those designed to enable the use of electronic communication and websites as a means for communicating information within insolvency cases. We have put in place safeguards to protect the interests of those who cannot or prefer not to use this form of communication. We know from responses to the consultation that this change will be very widely welcomed. We estimate that the savings across the whole body of insolvency cases from the seven proposals for change to the Insolvency Act 1986 in this draft order, and to the Insolvency Rules 1986, will be more than £30 million a year. The Delegated Powers and Regulatory Reform Committee of this House is satisfied that the order in its present form meets the tests in the Legislative and Regulatory Reform Act 2006 and is appropriate to proceed as a legislative reform order. The Regulatory Reform Committee in another place has also recommended that it be approved, and the Government intend to bring it forward for approval there early in the New Year. This order will bring real benefits to those unfortunate enough to be owed money by failed businesses. We must do all we can to ensure that the insolvency processes are administered as efficiently as they can be to help those creditors recover as much as possible of what they are owed. The proposals in this order will help to achieve that.I commend this order to the Committee.