Report on the Insolvency (Amendment) Bill (NIA Bill 39/11-16)
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Committee for Enterprise, Trade and Investment Report on the Insolvency (Amendment) Bill (NIA Bill 39/11-16) Together with the Minutes of Proceedings of the Committee relating to the Report and the Minutes of Evidence Ordered by the Committee for Enterprise, Trade and Investment to be printed on 3 March 2015 Mandate 2011/16 Fifth Report - NIA 227/11-16 Membership and Powers Membership and Powers Powers The Committee for Enterprise, Trade & Investment is a Statutory Committee established in accordance with paragraphs 8 and 9 of the Belfast Agreement, Section 29 of the Northern Ireland Act 1998 and under Assembly Standing Order 46. The Committee has a scrutiny, policy development and consultation role with respect to the Department of Enterprise, Trade & Investment and has a role in the initiation of legislation. The Committee has power to: ■ Consider and advise on Departmental Budgets and Annual Plans in the context of the overall budget allocation; ■ Approve relevant secondary legislation and take the Committee stage of relevant primary legislation; ■ Call for persons and papers; ■ Initiate inquiries and make reports; and ■ Consider and advise on matters brought to the Committee by the Minister of Enterprise, Trade & Investment. Membership The Committee has 11 members, including a Chairperson and Deputy Chairperson, and a quorum of five members. The membership of the Committee is as follows: Democratic Unionist Party Paul Givan1 William Humphrey2 Gordon Dunne Paul Frew3 Green Party Steven Agnew Sinn Féin Phil Flanagan (Deputy Chairperson)4 Megan Fearon5 Máirtín Ó Muilleoir6 Social Democratic & Labour Party Patsy McGlone (Chairperson)7 Fearghal McKinney8 Ulster Unionist Party Danny Kinahan9 1 With effect from 16th September 2013 Mr Sydney Anderson replaced Mr Stephen Moutray. With effect from 1st December 2014 Mr Paul Givan replaced Mr Sydney Anderson 2 With effect from 27 February 2012 Mr Paul Givan replaced Mr Robin Newton. With effect from 21 May 2012 Mr Robin Newton replaced Mr Paul Givan. With effect from 16 September 2013 Mr Sammy Douglas replaced Mr Robin Newton. With effect from 6th October 2014 Mr William Humphrey replaced Mr Sammy Douglas 3 With effect from 24 October 2011 Mr Paul Frew replaced Mr David McIlveen 4 With effect from 02 July 2012 Mr Phil Flanagan replaced Mr Daithí McKay as Deputy Chairperson 5 With effect from 10 September 2012 Ms Maeve McLaughlin was appointed as a Member. With effect from 2nd December 2013 Ms Megan Fearon replaced Ms Maeve McLaughlin 6 With effect from 23 January 2012 Ms Jennifer McCann replaced Ms Sue Ramsey. With effect from 10 September 2012 Ms Sue Ramsey replaced Ms Jennifer McCann. With effect from 21 October 2013 Mr Mitchel McLaughlin replaced Ms Sue Ramsey. With effect from 6th October 2014 Mr Chris Hazzard replaced Mr Mitchel McLaughlin. With effect from 10th November 2014 Mr Máirtín Ó Muilleoir replaced Mr Chris Hazzard. 7 With effect from 23 April 2012 Mr Patsy McGlone replaced Mr Alasdair McDonnell. With effect from 07 September 2012 Mr Patsy McGlone replaced Mr Alban Maginness as Chairperson. Mr Maginness rejoined the Committee as a member from 10 September 2012. 8 With effect from 7th October 2013 Mr Fearghal McKinney replaced Mr Alban Maginness 9 With effect from 06 February 2012 Mrs Sandra Overend replaced Mr Mike Nesbitt. With effect from 4th July 2014 Mr Danny Kinahan replaced Mrs Sandra Overend i Report on the Insolvency (Amendment) Bill (NIA Bill 39/11-16) List of Abbreviations and Acronyms used in the Report BIS Department for Business, Innovation and Skills CVL Creditors’ Voluntary Liquidation DETI Department for Enterprise, Trade and Investment DSO Departmental Solicitor’s Office FSA Financial Services Authority FSCS Financial Services Compensation Scheme ICAI Institute of Chartered Accountants in Ireland IP Insolvency Practitioner IVA Individual Voluntary Arrangement MVL Members’ Voluntary Liquidation PWC PriceWaterhouseCoopers RPB Recognised Professional Body SIP Statement of Insolvency Practice ii Table of Contents Table of Contents Membership & Powers i Report Executive Summary 1 Introduction 2 Summary of the Insolvency (Amendment Bill) as presented to the Committee for Enterprise, Trade & Investment in the Committee Stage 3 Summary of Consideration 6 Committee Consideration of Other Issues 15 Clause by Clause Scrutiny of the Bill 18 List of Appendices 20 Appendix 1 Minutes of Proceedings 25 Appendix 2 Minutes of Evidence 39 Appendix 3 Written Submissions 79 Appendix 4 Memoranda and Papers from DETI 117 Appendix 5 Research Papers 319 Appendix 6 List of Witnesses 349 iii iv Executive Summary Executive Summary Purpose 1. This Report details the Committee for Enterprise, Trade & Investment’s consideration of the Insolvency (Amendment) Bill (the Bill). 2. The Bill is intended to update Northern Ireland insolvency legislation that was made before the advent of modern methods of electronic communications. The Bill addresses those procedures which, though relevant in the past, have become outdated and pointless and endeavours to make other procedures more efficient. Principles of the Bill 3. The main principles of the Bill are: ■ To establish that documents stored and transmitted electronically in the course of insolvency proceedings are as good and valid in law as paper documents, including communicating documents by displaying them on a website; ■ To enable the use of means such as video and teleconferencing at meetings of creditors, members or contributors of companies; ■ To enable liquidators and trustees to reach compromises over what sums they should accept; 4. The Committee engaged in a call for evidence from interested organisations and individuals, as well as from the Department of Enterprise, Trade and Investment as part of its deliberations on the Bill. Evidence from stakeholders indicated there was broad support for the Bill, although there were concerns raised over a number of provisions. Committee consideration of Key Issues 5. The Committee had concerns in relation to the practicalities relating to the holding of remote meetings; the retention of the fast-track system for voluntary arrangement; repeal of the early discharge procedure; the requirement to consult the Lord Chief Justice about the making of orders; and the requirement for statutory demands to be in writing. 6. The Committee considered that key issues relating to the Bill were as follows: ■ Transitional arrangements for the removal of the requirement for annual meetings; ■ Provisions for Deeds of Arrangement as an insolvency procedure is repealed; ■ Provisions relating to after-acquired property of a bankrupt relating to banks offering accounts to undischarged bankrupts; ■ The introduction of the option of partial authorisation of insolvency practitioners; and ■ The need for a robust code of conduct for insolvency practitioners; 7. Committee agreed to an amendment to Clause 11 of the Bill, Deeds of arrangement, as proposed by the Examiner of Statutory Rules. The Committee further agreed to the wording of the amendment to Clause 11 to be brought by the Department at Consideration Stage. 8. The Committee agreed to an amendment to Clause 13 of the Bill, After acquired Property of Bankrupt, following consideration of correspondence with the Chancery and Probate Committee. The Committee further agreed to the wording of the amendment to Clause 13 to be brought by the Department at Consideration Stage. 9. Following consideration of evidence on the need for a code of conduct for Insolvency Practitioners, the Committee agreed to the Department’s proposal to bring a new Clause at consideration stage in order to make such provisions. The Committee considered the proposed clause and was content with the wording. 1 Report on the Insolvency (Amendment) Bill (NIA Bill 39/11-16) Introduction 10. The Insolvency (Amendment) Bill was introduced to the Northern Ireland Assembly on 7th October 2014. The Assembly debated the principles of the Bill in the Second Stage on 10th November 2014 when the Bill was passed to the Committee for Enterprise, Trade & Investment. The Committee sought and received approval of the Assembly in Plenary Session on to extend its consideration and scrutiny of the Bill to 13th March 2015. 11. The Bill contains 21 clauses and three schedules. 12. The Committee launched a call for evidence from 20th October 2014 to 1st December 2014. 13. In total six substantive written evidence submissions were received. These are included at Appendix 3. Officials from the Department of Enterprise, Trade & Investment and representatives from PriceWaterhouseCoopers (PWC) and the Institute of Chartered Accountants in Ireland (ICAI) gave oral evidence to the Committee. 14. During the Committee Stage of the Bill the Department informed the Committee that amendments will be needed to the text of the Insolvency (Amendment) Bill, mainly as a consequence of changes to legislation underway at Westminster.1 These amendments were not yet drafted, therefore the agreement of the Committee to the clauses in the Bill is subject to the Committee’s agreement to further amendments to be brought by the Department at Consideration Stage. 1 Appendix 4: Memoranda and Papers from DETI – Correspondence from DETI 12th December 2014 2 Summary of the Draft Insolvency (Amendment) Bill as Presented to the Committee for Enterprise, Trade & Investment in the Committee Stage Summary of the Draft Insolvency (Amendment) Bill as Presented to the Committee for Enterprise, Trade & Investment in the Committee Stage Clause 1: Attendance