My Lords, I have been tracking pre-packs and the complications thereof for many years. I begin by adding to those of other noble Lords my thanks to my noble friend the Minister and, in particular, to Paul Bannister and the Insolvency Service, for the time they have given to many of us and the changes that have been made, which are certainly welcome.
Before I turn to the substance of the debate, I want to take one of my five minutes to address the Whip on duty. As I have already noted, I have a long-standing interest in this issue. I was in a business meeting in Stoke on Thursday afternoon when I received a call from the noble Lord, Lord Mendelsohn, to tell me that the debate had been tabled for today and that the speakers’ list would close at 6 pm that evening. I was grateful to the noble Lord but horrified to find out he was correct. My Whip for the week arrived at 15.49 on Thursday, so, with a closing time of 18.00, I had precisely two hours and 11 minutes to read my email and put my name down to speak. I am afraid I have to say to the Whip on duty that that is not good enough. I would like them to take the matter up with the Chief Whip and to inquire how this happened and what will be done to prevent it happening again. If I do not get a reply, I certainly do not intend to let the matter rest.
I once again make it clear that, like other noble Lords, I do not oppose the principle of pre-packs. They are a very useful tool in the insolvency practitioner’s armoury but, as we have said many times, in the hands of the unscrupulous they can too easily turn into a fraud on the creditors. The history of the Government’s approach to pre-packs is of two steps forward followed by one step back. They have never quite been able to nail the issue down once and for all. In part, that is the story today: they do not quite close the door on the ruthless.
There are three issues: first, the failure to create institutional memory, which a mandatory reference to the pre-pack pool would have solved; secondly, there remains a concern, raised by several noble Lords, about the level of expertise required by evaluators despite the welcome requirement to have some level of professional indemnity insurance; and, thirdly, the definition of “connected persons”, raised by the noble Lord, Lord Mendelsohn.
In connection with that, I invite my noble friend the Minister to reread the Explanatory Memorandum that accompanies the regulations. Paragraph 10.1, under the heading “Consultation outcome”, says:
“It is expected that many connected person purchasers will use the Pre-Pack Pool to obtain the independent opinion required by the instrument”,
yet elsewhere paragraph 7.4 states that in 2019 only 23 out of 260 connected person pre-pack sales were referred to the pool, which is less than 10%. How can that possibly be a statement that has any real verification and expectation of being fulfilled? Paragraph 12.1, in the section entitled “Impact”, states:
“There is no, or no significant, impact on business, charities or voluntary bodies.”
If that is really the considered view of the Government, what on earth are we doing sitting here today discussing it all? Meanwhile, the dangers of the new restructuring plan procedures introduced under the Corporate Insolvency and Governance Act, about which many Members of your Lordships’ House raised concerns during the passage of the Bill, are becoming clearer.
I thank my noble friend for what he has done but I am afraid the battle is not yet won. As many noble Lords have said, we need to keep the matter under urgent review over the next few months as we emerge from the pandemic and pre-packs become a very familiar feature of the landscape.
6.32 pm