I move amendment No. 208:

In page 119, line 5, to delete "as at the time of sale".

I do not think we will press this amendment. We wanted to remove the reference to the time of sale. Discussions we have had suggested that that is probably a useful guideline to the receiver as to what his responsibilities are relating it to a time given that the value of properties will fluctuate over time anyway, and you have to fix a time at which you are valuing it. Probably the present provision is more precise than it would be if I pressed my amendment. I will not press it.

Amendment, by leave, withdrawn.

Amendment No. 209 in the names of Deputies Bruton and Barrett. Amendment No. 210 is related, so we will take both together. Agreed? Agreed.

I move amendment No. 209:

In page 119, to delete line 6, and substitute the following:

"(2) The duty of a receiver under subsection (1) shall be a duty owed to the company and notwithstanding any other enactment or rule of law or the provisions of any instrument—".

This amendment is to clarify that the receiver has a responsibility to the company and that his paramount responsibility is to the company in the circumstances. It is clear from various cases, for example, Goslingv. Gaskell, the Industrial Development Authority v. Moran and so forth, that the responsibility of the receiver is to the company. I think this amendment would clarify that and I hope the Minister can accept it.

Are we discussing both amendments together?

Section 316 (a) is designed to give statutory backing to what up to now has been "best practice" based among other things on a series of court judgments over the years as to the duties of a receiver.

Subsection (2) qualifies the provisions of subsection (1) and rules out the availability of certain defences which would ordinarily be available to a receiver, either arising from the instrument on the basis of which he was appointed, or under statute law.

When the Bill was originally published, the introductory sentence to subsection (2) was identical to that now proposed by Deputies Bruton and Barrett in amendment No. 209. We introduced an amendment at Committee Stage in the Seanad to replace that wording with the present wording for two reasons.

First, we considered it unwise that a receiver's duty to obtain "best price" under this section should be regarded as a duty owed to the company. If we left it as it was, then the company would be the only party which could take an action against the receiver for breach of his duty under the section.

In fact, we consider that those likely to be aggrieved at the receiver selling assets at an under-value are more likely to be other parties, for example the debentureholder, or other creditors who may find their position worsened as a result of such a sale, or indeed even members or contributories of the company.

This was the first reason why we changed the duty from being one owed to the company to a general one. This would leave the way open for any aggrieved party who could show he was owed a duty of care by the receiver to take an action against him.

Second, the phrase "any other enactment or rule of law" was deleted. When the Bill was originally prepared, this phrase was put in as a kind of "safety net", just in case there were any other provisions of law that might conflict with this subsection. Following examination of the matter, we did not find any other such enactments or rule of law which might be relevant here and accordingly it was considered appropriate to delete the phrase.

From the foregoing, the Deputies will understand that I cannot accept their amendment. However, in looking at the section following the amendments made in the Seanad I am concerned that section 147 (2) (a) could have an unintended effect and I am satisfied that it should have been amended by the deletion of the words. . . "by the company" in line 8, page 119. The retention of these words means that, while a claim by a receiver that he was merely the agent of the company will not succeed when the court proceedings were brought by the company, it would succeed where the proceedings were brought by anyone else. I would not want section 147 (2) (a) to have such a limiting effect and the amendment I have tabled would, accordingly, remove the words "by the company" from the subsection.

I am not certain that the original wording would have had the effect that the Minister fears it would have had. It just states that the general duty of the receiver is to the company. I do not think it would prevent others from taking action if they felt that they had been adversely affected.

The section was thoroughly examined and we were advised that it would.

Amendment, by leave, withdrawn.

I move amendment No. 210:

In page 119, line 8, to delete "by the company".

Amendment agreed to.

Amendment No. 211 is a substitute amendment on the white list of amendments circulated today.

I move amendment No. 211:

In page 119, between lines 15 and 16, to insert the following:

"Provided that he shall not have power, without the consent of the court, to sell any real or personal property, or other interests belonging to the company, to a former director of the company who has been disqualified under section 135 of this Act.".

This is a new amendment which we are putting forward here. Our original amendment stated that assets should not be sold to a previous director of a company virtually at all. I think that went too far for some of the reasons I have been putting forward myself in regard to blacklists and so on. This amendment provides that a receiver shall not sell the company to a former director of the company.

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If a person has been disqualified he clearly is not the sort of person who is capable of buying assets of the company from the receiver. This amendment essentially prevents the phoenix syndrome being reinstituted by virtue of a former director being able to buy from the receiver and the receiver being placed in the position, perhaps by virtue of the organisation of some sort of boycott of the auction by the former director, that that former director is the only possible purchaser of the assets. Our amendment provides that if such a former director has been disqualified it should not be possible for the receiver to sell the company to him. It might well be that the receiver would have no choice but to sell the company to him under present provisions if a boycott could be organised by the former director.

Section 147 will insert a new section 316 A into the Principle Act which will put a duty on receivers to get the best price reasonably obtainable for the assets they sell in the course of the receivership. As already mentioned, this is effectively giving statutory backing to what has been the practice up to now. The amendment would effecively prohibit a receiver from selling the property of a company to a former director who had been disqualified under section 135 without the approval of the court.

Under section 146 of the Bill, the number of parties who can apply to the court for directions in relation to the exercise of his powers by a receiver has been considerably extended. In general, I think it is preferable to allow a party apply to the court where they feel their interest is being affected, than that the receiver should be obliged to go to the court where he proposes to dispose of assets to a former director. For instance, such a requirement could delay a proposed management buy-out. Knowing that any creditor can seek a court direction, is, I believe, the appropriate check in this situation. In these circumstances, I am more than satisfied that any interested party could take an action where they felt the receiver should not be selling a property to a former director.

A similar amendment was tabled by Deputies Bruton and Barrett on section 104 of the Bill in relation to liquidators. The Minister agreed to re-examine that section in the light of the points raised in the discussions by the Deputies on that section and I am prepared to do likewise in respect of the present amendment.

That is okay.

Amendment, by leave, withdrawn.
Section 147, as amended, agreed to.
Section 148 agreed to.