My Lords, I welcome the spirit of these amendments, which intend to improve the functioning of insolvency. I am delighted to be able to confirm that today a number of industry reforms to pre-packs, recommended by Teresa Graham and her review, have been introduced. I am glad to hear support for those changes from my noble friend Lord Leigh of Hurley. Creditors will inevitably lose some money when a company fails, and this is unavoidable. However, in delivering these voluntary pre-pack reforms, creditor bodies and the insolvency industry have come together in a good way to support the reforms. I agree with my noble friend Lord Hodgson that creditors need confidence that the best deal is obtainable.
Another cause for celebration is that from today a further reform introduces new guidance on marketing to ensure that creditors can be confident that they are receiving the best price for the sale of the insolvent business, but these changes need to be given time to take effect before yet further changes are considered. The Government will undertake a review once these have bedded in.
On small businesses, the redundancy payments scheme provides valuable assistance to employees when their employer enters insolvency. All employees can access the scheme. There has recently been consultation on collective redundancies and the outcomes for employees in an insolvency. The findings will be published in due course.
The existing law on the priority of payments to creditors in an insolvency seeks to ensure that there is a fair distribution of a company’s assets. Any change to give preference to the types of small business set out in the amendment would, of course, have to be at the expense of other creditors. Giving priority to such creditors would have wider consequences, such as increasing the cost of suppliers from other creditors, or higher costs of borrowing for businesses in general. The Government do not consider that an evidence-based and sufficient case has been made for changing the long-established order of priority in that respect.
On Amendment 52ZD, it is obviously important that, if a viable company is unable to pay its debts, it is given an opportunity to continue as a going concern. That is why the insolvency regime already provides for a moratorium. It is important that any extension of the existing moratoria offers appropriate safeguards and protections to creditors. Otherwise, there is a risk that businesses will find financing more difficult.
I am so sorry that the noble Lord, Lord Mendelsohn, is not here, because he has made a valuable point with his work on “debtor in possession”, elaborated in a helpful note that he sent me over the summer. I agree that viable businesses should allow sufficient time to develop a rescue plan, and I am therefore very pleased to be able to say today that, while we cannot accept an amendment to this Bill, the Government are already reviewing this area and we will announce our proposals in due course.
I hope that the noble Lord has found my explanations reassuring in this area, and on that basis feels able not to press his amendment.