I first thank both noble Lords for their interesting and valuable contributions. Throughout this pandemic the Government have helped the companies that have been most affected by the restrictions that were necessary and were introduced
to keep us all safe. Some of the issues raised today highlight how essential it is that we do not withdraw prematurely the help and support for those companies, now that they are able to reopen. We do not want to risk allowing them to fail now, because to do so would mean that all the support we have given so far is rendered pointless; and, of course, there would be a negative effect on the economy—on businesses and people’s jobs.
These new criteria seek to strike the right balance between the rights of creditors, who have not received payment for many months, and of their debtors, who would otherwise be viable were it not for the pandemic. In many cases, an unnecessary insolvency would be the worst outcome for all involved: for the company in question, for the employees and, of course, for the creditors.
These measures underpin the Government’s consistent message that discussion is essential between creditors and their debtors. They should continue to negotiate where possible to promote a return to full profitably for all involved, allowing debtors to return to their full pre-Covid financial health and to repay all their debts, not just debts to petitioning creditors.
The points raised have highlighted the importance of tapering the effects of the current temporary measures, and these targeted criteria seek to minimise the risk of unnecessary insolvencies while facilitating a gradual return to the normal operating of our world-class insolvency regime. These regulations will continue to provide much needed support for businesses, allowing them to concentrate their energies on continuing to trade and build upon the foundations of our economic recovery.
I will move on to address some of the points raised, starting with those made by the noble Lord, Lord Sikka. The SI does not amend the section of the Insolvency Act 1986 relating to winding-up orders. I note the point raised by the noble Lord about freezing bank accounts on a petition, but this was intended as part of the return of the framework back to normal operating. The noble Lord also raised several issues relating to company and insolvency law, none of which relates to this particular statutory instrument. A number of them went well beyond the scope of these regulations, but I can tell the noble Lord that we keep wider company and insolvency law frameworks under constant review and will not hesitate to bring forward amendments to the House if and when needed.
The noble Lord, Lord Lennie, asked how many stakeholders the Government have consulted and asked about user criteria. We have been in close dialogue with businesses and professional groups about these measures and their likely impact. Given that the effects of the Covid-19 crisis are still with us and businesses are still dealing with its impact, the consensus was that these measures are necessary to provide ongoing support to businesses that need it, while restoring some creditor powers.
The noble Lord asked how the court would decide whether a repayment proposal is reasonable. The courts are well versed in adjudicating on the grounds upon which a company winding-up order should be made and will be able to draw on their existing discretion and experience in that regard. If the company has had the time to present its proposals for repayment and
still cannot satisfy the creditor, in many cases it is right that it should be wound up. However, having said that, the court will be able to refuse to make a winding-up order where it appears that a creditor is attempting to abuse the winding-up process.
The noble Lord also asked why the moratoriums preventing the forfeiture of commercial leases and the suspension of the CRAR regime end on 25 March 2022 when the rest of the measures expire on 31 March 2022. The primary objective of the tapering measures is to allow a gradual return to the normal operation of the insolvency regime, whereas the commercial rent element was included so as to not undermine the rent arbitration system before it is introduced.
I remind the noble Lord, Lord Sikka, that I said in my opening remarks that the legislation is being introduced in the House of Commons today. The Government will monitor closely how this temporary measure is working and, as ever, we will bring amendments to this House if necessary. No petitions were made during the period that the noble Lord referred to.
I think I have dealt with all the questions that were asked. I thank noble Lords again for their contributions to this debate and commend these regulations to the Committee.