SECTION 114.

I move amendment No. 150:

In page 96, between lines 40 and 41, to insert the following:

"(2) For the purposes of subsection (1) the value of any goods or services sold or supplied by way of consideration for a floating charge is the amount in money which at the time they were sold or supplied could reasonably have been expected to be obtained for the goods or services in the ordinary course of business and on the same terms (apart from the consideration) as those on which they were sold or supplied to the company.".

This is based on section 245 (6) of the UK Insolvency Act, 1986, and it would, I think, introduce useful clarification to section 114 of the Bill. The section replaces section 288 of the 1963 Act and provides that where a floating charge is created within 12 months before a company goes into insolvent liquidation, the charge will be invalid except as to money actually advanced or paid, or the actual price or value of goods or services sold or supplied to the company in consideration for the charge. While the "money actually advanced or paid" or the "actual price paid for goods" and so on, is easily established, the question of value is not so easily established and it would seem to be possible for the charger and chargee to get around the section as it stands by agreeing an exorbitant value between them for the goods involved. This amendment would make it clear, therefore, that when the section speaks of the value of goods or services sold or supplied what it means is the real or true value.

The Minister's amendment defines "value". If there is a difference between the actual price and the value, if goods are supplied for a certain price and, as the Minister defines "value" in his amendment, if the value is greater than the price, which will operate? Will it be the price or the value?

The real price will operate.

I have in mind that it might be sold at an under value. It might only be a slight undervalue, but it would not come up to value as defined in the amendment. In that situation I take it that "value" is as defined?

In that case it would be value as agreed, because it would not be defrauding the other creditors. Where it would be defrauding them is if the so-called value, as agreed, was significantly above the real price or true value of goods or services. In the case Deputy O'Dea instances, therefore, it would stand at what was agreed, because it would help rather than defraud the other creditors.

Amendment agreed to.
Section 114, as amended, agreed to.