asked the Minister for Industry and Commerce whether he is aware that it appears to be possible, as the law stands at present, for the holder of a mortgage debenture on the assets of a limited liability company to put in a receiver on one day's notice, thereby causing the close-down of the company with resultant serious unemployment and loss, despite the fact that the interest payments provided for in the debenture have been made on the due dates and the capital sum secured by the debenture is within the agreed limits; and whether he has any proposals for the amendment of the law so as to prevent such unfair action in the future.
Ceisteanna—Questions. Oral Answers. - Limited Liability Company Law.
22.
The circumstances in which a Receiver may be appointed by the holder of a debenture depend on the relevant provisions set out in the debenture. Those provisions are a matter for negotiation between the parties before the creation of the debenture, and both the lender and the borrower freely enter into the bargain. If a lender purported to appoint a Receiver in circumstances other than those to which the borrower had agreed, the borrower could take legal action to protect his interests. The question of enacting legislation does not, therefore, arise.
Would the Minister agree that there is ample precedent for interference in contracts freely entered into? I quote the Rent Restrictions Act. Is the Minister further aware that failure to interfere in such manner can result in the circumstances set out? From that point of view, would the Minister not agree it might be desirable to consider amending legislation?
Interference in a contract creating debentures might have the effect of preventing people who secure borrowings on debentures from securing them at all.