SECTION 149.

I move amendment No. 212:

In page 119, line 37, after "section 319." to insert the following:

"Provided always that the receiver shall not be required to include in such statement of affairs particulars of the company's unsecured debts and liabilities except when appointed under the provisions of a floating charge in which case he shall be required to include in the statement of affairs particulars of preferential debts but not other unsecured debts and liabilities.

The term preferential debts shall be such debts as are paid in a winding-up in priority to all other debts and which are set out in the Companies Acts, 1963 to 1986.".

It is not possible for a receiver who has been appointed by a debenture holder to have the necessary information about the company's unsecured creditors so that he can comply with the provisions of section 149 in its present form. He has no responsibility to unsecured creditors and, therefore, will not be in a position to comply with this requirement. We believe that a receiver appointed in those circumstances should not be obliged to provide information to which he has no access.

Where a receiver is appointed on foot of a floating charge, then sections 319 and 320 of the Principal Act require the company to provide the newly appointed receiver with a statement of company affairs and, in turn, require the receiver to forward a copy of the statement to various parties, including the Registrar of Companies, together with any comments he sees fit to make thereon.

Section 320 provides that the statement must show, on the date of the receiver's appointment, the company's assets, debts and liabilities; the names and addresses of its creditors; the securities held by, and when given to, those creditors and such other information as may be prescribed.

CRO Form 17 prescribes in precise manner the information to be prepared pursuant to these sections. This includes, at List E, details of unsecured creditors. The main obligation to prepare and verify this statement rests on the company directors and secretaries but the receiver is empowered to require past and present company officers, promoters and employees to provide information. Receivers have been lax in complying with the requirement of filing the statement with the registrar of companies, the excuse offered being that the statements are not being submitted to them in the first place. To encourage officers to discharge their responsibilities more substantial penalties can now be imposed for failure to comply by virtue of section 148 of the present Bill.

As a fall-back position, section 149 provides that, even if the directors, or failing them, the secretary or other responsible persons of the company, do not, as they should, prepare a statement of affairs somebody will. As presently proposed the statement the receiver would be required to prepare is identical to that required by section 319 (1). However, it must be said that the primary responsibility to prepare the statement will remain on the company's officers.

I can understand the reasons behind the Deputies' amendment, the effect of which would be to reduce the amount of information that a receiver would be required to include in the statement of affairs. However, I have to say straightaway that the information which the receiver would have a duty to include in the statement is information that the receiver should himself obtain to fully assess the position of the company. To accept this amendment would considerably reduce the value of requiring the preparation of the statement of affairs by the receiver where the company officers had failed to do so in the first place.

Even though a company goes into receivership existing suppliers may continue to supply products to the company in the hope and expectation that the receiver will be able to keep the company going and eventually sell it as a going concern. One basis on which they can make an informed decision as to whether to continue supplies would be where they have available to them a statement showing the extent of the company's indebtedness, which would give a pointer as to the eventual outcome of the receivership. Reducing the amount of information, as proposed by the Deputies, would render the information available less usable than otherwise.

Granted there may be receiverships where, on first examination, it appears that the liabilities of the company in question are so much greater that the assets that the chances of making any payment whatsoever to the creditors, and particularly the unsecured ones, is very remote. In such cases, the question must be asked whether the time and effort, not to mention the cost, involved in preparing the statement would be out of proportion to the use the information can be put to at the end of the day. The way I see it is that to properly assess the circumstances of the company to which he is appointed, a prudent and diligent receiver should obtain full details of the company's liabilities, and I am happy that the present fall-back position requiring, as it does, the preparation of a full statement of the company's assets, debts and liabilities by the receiver is necessary and must be maintained.

In the circumstances I would not be happy to reduce the information available in the way provided for in the Deputies amendment.

Our amendment attempts to improve the present situation but I urge the Minister to delete this section altogether as I think it will create greater difficulties in getting information. It is the duty of directors in the first place, under the existing Act, to provide this but the Act is not being complied with. The penalty for failing to comply with it is a fine not exceeding £100, if I am correct. If a receiver is appointed, the duty to supply a statement of affairs within the specified period should remain on the directors of the company and the directors should be made swear the statement of affairs is accurate. After all, the receiver is appointed to do a particular job but he cannot do that job without the co-operation of the directors of the company involved; as he may not be in a position to put a proper value on the assets required to be listed. It is even more ridiculous, given that we are not specifying any minimum qualifications for a receiver, to now impose this duty on that person.

Why should section 319 of the present Act not be complied with? If someone fails to do so they should be dealt with under section 135, whereby, if the court is satisfied, in any proceedings or as a result of an application under this section, that a person has been guilty of not supplying a list of the assets of the company it may make a disqualification order. That would be in addition to what is already contained in the existing Act. Quite honestly, we are going to delay the process even more. Subsection (1) of section 320A states that if, at the expiry of a period of two months from the date of his appointment to the company, the statement of affairs requested by section 319, that is, from the directors, has not been submitted to the receiver, the receiver shall, within 30 days from the expiry of that period, prepare a statement of affairs. We are extending this by a month so there is going to be a wait of three months from the date of the appointment of a receiver. I do not think that is the proper way to do business. This provision will not afford protection to shareholders, creditors or employees; instead it will relieve directors of a legal obligation that exists at present. We should strengthen section 319 and impose greater penalties on directors who do not comply with its terms. They are the ones who know the value better than a receiver.

I also ask the Minister to build into section 135 some provision on non-compliance and give the court the power of disqualification. Why put this on the shoulders of the receiver simply because somebody, who is by law required to do something is not doing it and who is the best person to put a value on the assets? In addition, directors should be made swear the statement of affairs is accurate so that we can be satisfied we are getting the true picture. I urge the Minister to delete this section as it stands, to come back on Report Stage having strengthened section 319 of the existing Act and to look at the possibility of using section 135 of this Bill to deal with this problem. I fail to see why it should be thrown on the shoulders of the receiver.

I agree with what Deputy Barrett has said. It seems the receiver is going to be placed in an invidious position in that within 30 days of being appointed he will have to value the assets and then try to sell them. If he fails to sell them at the value listed in the statement of affairs, he will have egg on his face. In the event of a company going into receivership the directors should be obliged to make a statement of affairs outlining the value of the assets. Their statement will be taken at face value but it is the receiver who will have the responsibility of selling the assets and if he has to value them, as I think he will, this will create a further problem. The statement of affairs has to contain the particulars of the company's assets, debts and liabilities, names and residences of the creditors and so forth and has to be verified in an affidavit.

The other question posed by Deputy Barrett is what advantage is there in getting this from the receiver? I can see some point in getting it from the directors in the sense that you get the director's assessment of what the company is worth. That is useful information for the receiver to have but for the receiver to get an assessment of what the company is worth when the receiver is going to have the job of selling it anyway is duplication or extra bureaucracy that will delay the quick disposal of the company's assets.

First, the compulsion is on the officers of the company and it is only a fall-back position that the receiver would have to prepare the statement. The obvious advantage would be to give those who might continue to supply the company an opportunity to see the exact position of the company and allow them make a decision on the basis of the rough state of the company which they would not be able to do if such a statement was not available. In relation to the penalties Deputy Barrett referred to, they have been substantially increased in section 148, on summary conviction the fine goes up to £1,000 and on indictment to £5,000.

Is it the case that the statement of affairs as put forward by the receiver will have to value the assets?

Is it not going to be difficult for the receiver to get the best possible price for those assets? If he has declared what he thinks they are worth it is going to be hard to get people to bid more than what the receiver thinks they are worth. In one way the Minister is making him declare what his reserve is at an auction and not giving him the advantage of concealing that, and getting the best possible price. If he gets more than his reserve will and good. From a commercial point of view, given that it is the receiver who is going to have to sell the assets, in fact, there is a positive disadvantage in the receiver being asked to give a valuation of the assets. If there was a special statement of affairs responsibility for the receiver which excluded valuing the assets but stating what they were, that might make some sense but asking him to value the assets, given that it is his job to sell them, seems to create a potential conflict of interest and to be commercially unwise.

Obviously, the receiver would take advice in putting a value on the assets. To simply list the assets would not be much information to potential suppliers, it would not make them any wiser as to the state of affairs. They may be aware of what many of them are anyway. It is the value that one might attribute to them that would give them an indication of the possibilities for the company.

Yes, but my advice from people who are acting as receivers is that this section will cause them problems in getting the full value of the assets. This is not something I have made up. Deputy Barrett and I have been talking to receivers and they have told us that this section will cause problems for them in getting the best value, if they are obliged to show their hands in this way as to the value of the assets.

The existing section 320 says that the statements as to the affairs of the company required by section 319 to be submitted to the receiver shall show as at the date of the receiver's appointment particulars of the company's assets, debts and liabilities, the names and residences of its creditors and so on. How can a receiver three months afterwards prepare a statement of affairs and state what the company's assets, debts and liabilities were three months earlier? He may not be aware of all the debts.

It is up to a diligent receiver to establish the facts.

We are not asking him to have any qualifications. I do not see the point in this. We should impose heavy penalties on people to make them comply with the provisions of the existing Act — section 148 does that to some extent — and go further and use section 135, but do not start putting responsibility on somebody whose ultimate job is to dispose of these assets. As Deputy Bruton says, he has to show his hand before he begins. I do not see the benefit of this.

I made the point in relation to suppliers, which is a valid one, but there is also the right of creditors to know the position of the company.

They will know that soon enough, when the assets are sold. I could see the point that they would want to have a statement of the assets in terms of physical entities or things, but the requirement to value them should not be placed on the person who is trying to sell them.

It is only as a fall-back position. The onus is on the company officers to do so and it is only when they fail, and as a last resort, that the receiver is obliged three months later to make a statement for the benefit of creditors, the main suppliers and so on.

Is this going to delay the whole proceedings? It is going to cost more money. If we take property for argument sake, its value changed considerably in this town in the space of three months and it is likely to change in the future. The value of a property in December 1988 as against its value in March 1989 was a lot different. Even auctioneers a long time in the profession would say that they could not put a value on it.

This need not necessarily delay receivers. If a receiver feels he can move straightaway, subject to the provisions of section 147 under which he has to get the best possible price, he may move.

This requirement will cost money. If the Minister requires receivers to prepare a statement of affairs they are going to put that in as an additional line in their fees. Where are those fees going to come from but out of the assets of the company, in other words, there will be less for the creditors. The Minister is not doing the creditors a favour.

We are, by being able to show them the state of affairs. A receiver who has this obligation is going to be more vigorous in trying to get the officers of the company to compile the statement.

The receiver has no hold over the officers of the company in that situation. He has taken over from them and they are gone at that point. I do not see the point in this. We have gone through this not just here but with others, and we have no axe to grind one way or the other, but our advice is that this section is a waste of time.

I am not prepared to accept the deletion of the section or the amendment, if that is what the Deputy is asking me to do.

Has the Minister any knowledge under the existing law of how many cases of non-compliance with section 319 of the Companies Act, 1963, were referred to the Director of Public Prosecutions? That is the real test.

If the Minister, and the Department were serious about pursuing people for not lodging statements of affairs they would have prosecuted directors. We have not done so over the last 20 years and they should not be coming in here asking receivers to fill up holes that directors have created and which the Department have not bothered to prosecute them for having created.

We do not have information on the number of people who have not subscribed to section 319 of the Principal Act. I am advised that the Registrar of Companies has suggested for a long time that receivers should be made responsible for filing these statements rather than filing excuses as to why statements cannot be made.

Is the amendment being pressed?

Yes, and we are opposing the section.

Amendment put.
The Special Committee divided: Tá, 2; Níl, 3.

Tá.

Barrett, Seán.

Bruton, John.

Níl.

Cowen, Brian.

Harney, Mary.

Callely, Ivor.

Amendment declared lost.

On a point of order, what is the status of this division?

I am advised that, once we have a quorum to begin a meeting, under the rules pertaining to Special Committees we do not require a quorum in relation to a vote.

My view of Standing Orders is that division is invalid unless a quorum takes part in it.

I am informed it does not apply to Special Committees.

Without in any way questioning your judgment of that, could you give me the source?

Standing Order 68.

What does it say?

In relation to the absence of a quorum of a Committee of the whole Dáil. The fact that it applies to the whole Dáil means, by implication, that it does not apply to a Special Committee.

I think this is a provision which applies to Standing Orders of the whole Dáil to Special Committees unless otherwise stated.

I am advised otherwise. Unless there is a specific argument advanced to that effect I am going to take the vote. It will be open to anybody to come back and check the validity of the vote at a future date.

I am coming back now. It is my interpretation that——

Your interpretation will not rule when I am in the Chair. I am in the Chair and am advised otherwise.

I do not mind what the Chair is advised. The Chair must make the decision. I accept the Chair's right to make the decision. There is no dispute about that, but it is equally in order for me to make a submission to the Chair.

Unfortunately, I cannot agree to it.

Is there not a provision in Standing Orders which states that the Standing Orders of the Dáil apply to Special Committees?

That refers to the rules to the effect that the procedure in the Dáil shall apply to the procedure in Committee of the whole Dáil and in Select or Special Committees, except that a Member may speak more than once on the same question. Not all the procedures in the Dáil apply to procedures in Committee of the whole Dáil. For example, Standing Order 58 provides for closure of debate in the Dáil or Committee of the whole Dáil. It allows a Member to claim to move "That the question be now put". This procedure is not available in Special Committee as the relevant Standing Order states specifically that (a) this applies to the Dáil or Committee of the whole Dáil and (b) that the Ceann Comhairle must be in the Chair. So it is not true to say that, because Standing Order 69 refers to the rules of the procedure in the Dáil applying to Select and Special Committees, that means, in every specific instance, it is as if we were in full Dáil session. For example, Standing Order 58 in relation to the closure of debate — notwithstanding Standing Order 69 to which Deputy Bruton has referred me — does not mean that in every instance and circumstance the procedure in the Dáil applies to a Special Committee. I am advised that, in relation to the voting arrangements here — the fact that we are below quorum at present — once we had a quorum at the beginning of the debate, we are not precluded from taking votes when our members fall below a quorum once the meeting begins. That is my advice.

On a further point of order, would the Chairman not agree that, out of courtesy to the Minister and to the Members of the Committee who are taking their responsibilities seriously here, it is a responsibility on Government Deputies to maintain a quorum in a committee of this kind, that it is regrettable, to put it as its mildest, that, with the exception of himself, the Minister and Deputy Callely, Government Deputies have not turned up?

Certainly I would prefer to see more people attending a Committee, regardless of their party affiliations. While it is a very good idea it is a problem we have encountered in Committees. We find it very difficult to get Members to attend a number of Oireachtas Committees. We must also remember that we are in recess, that it is not a case of this Committee sitting when the whole Dáil is sitting, when there are people available. I was advised earlier in the week of the difficulty of people being able to attend this meeting. Nonetheless I did not proceed to request the Whip of the Deputy's party to initiate a pairing arrangement or whatever. I regard it as the responsibility of each individual Member to be here. For that reason I did not interfere. To revert to the specific point I am advised — and my advice is fairly certain — that we can take a vote. I will certainly seek a written clarification and make a statement at the next meeting to ensure that we do encounter this problem again.

I thank the Chairman for that.

Question proposed: "That section 149 stand part of the Bill."

I understand that Deputies Bruton and Barrett are opposing.

We have argued the case here. This is most unfortunate for the Minister of State — although it is not her fault, obviously she was parachuted into this Bill without much notice — that the Minister and the Minister of State, Deputy Leyden seem to be elsewhere for reasons I am sure that are perfectly legitimate but unfortunate from the point of view of Members present, who are attending a meeting convened well in advance with the agreement of the Minister at the time. I really feel the Minister has given no justification for this section. As I have said, those who are being asked to operate this have told me, and I am quoting directly that "this section is nonsense". That advice has come to me from receivers who are supposed to be going to operate this provision. It is nonsense in their opinion and will cost money, money which will have to be forthcoming from creditors. It serves no additional purpose. I really do not understand why the Minister and her officials are persisting in their position on this in face of the arguments that have been advanced. There have been no counter-arguments of substance advanced by the Minister. I am surprised that she is not even giving the Committee any indication that she is prepared to consider the matter. She is saying she is going to stick with it and that is that. What are we supposed to be doing here? Both Deputy Barrett and I — I should not have to say this — have spent a lot of time preparing for this debate. Having gone into this section in considerable detail with different people and having spent at least as much time discussing it with experts as we have spent discussing it in this Committee, it is frustrating to say the least to have our arguments just brushed aside without getting an answer.

I apologise to the Deputies, but I am not in a position to indicate whether this can be changed. However, I will undertake to discuss the matter with the Minister before the next Stage. The main arguments being advanced for the inclusion of this section is to allow the creditors in the first instance and the suppliers to know the exact state of play in the company. The onus is rightly on the officers of the company to supply the information and compile the statement but when they fail to do so, as a fall back position, that duty has been placed on the receiver. I do not accept that this will delay matters. The receiver can move ahead and dispose of the assets if he believes that is desirable. The points made by the Deputies about the difficulties this will cause, have been grossly exaggerated. I do not accept that such difficulties would arise. Creditors and suppliers who might continue to supply a company in receivership have a right to know not just the list of assets but the approximate value of those assets so that they can make informed decisions in relation to their operations.

As Deputy Bruton said, we get various submissions, as I am sure the Minister and the Department do in relation to legislation. As politicians we have to make up our minds about what advice to accept and what advice to reject. We did not make up the points we put forward here. Professional people have told me that this section will make nonsense of the Bill. I am inclined to believe them, having listened to their arguments and having thought it through for myself. I cannot see any benefit in including this section.

It is grossly unfair — I do not say this with any disrespect to the Minister of State — to ask us to come in here today and prepare ourselves to deal with legislation with no backup service, when the Minister is not present. Quite honestly we might as well be sitting in the middle of St. Stephen's Green. If Ministers send in substitutes then they should clearly indicate to them that they have the authority to listen to good argument and either accept or reject valid points. They should not have to look over their shoulders to find out whether they can or cannot accept amendments or argument. I ask the Chairman not to waste our time having future meetings if the Minister is not going to be present for all the meetings. Otherwise I will not attend these meetings. This is a total and utter joke. People talk about the need for reform of the Dáil but this is enough to make us sick and makes a total joke of democracy, the running of the Dáil and the running of a committee. We should not talk about Dáil reform if we are not going to practise it when we get the opportunity to do so.

The Minister in question spent——

In fairness, the point has been made by both Deputies.

Question put "That section 149 stand part of the Bill."
The Special Committee divided: Tá, 3; Níl, 2.

Cowen, Brian.

Harney, Mary.

Callely, Ivor.

Níl

Barrett, Seán.

Bruton, John.

Question declared carried.

We agreed to continue until 6 p.m.

I did so because I thought we were going to get some sort of answers but the Minister has not answered the case made by us.

We are going on to a very important Part of the Bill.

On a point of order, the Minister is answering on the basis of her brief and the advice she is receiving in the same way any Minister of State or indeed the Minister would. There happens to be genuine disagreement between the Deputies concerned and the Department on this specific point. It is open to the Deputies to argue this point on Report Stage as vociferously as they have argued it here today and it is open to the Minister to make her representations. I am chairing the meeting and I am not holding a brief for anybody.

It is nothing personal.

I am not taking it personally. I presume Deputy Roche will be back shortly.

The Minister of State has said that she will have to talk to the Minister. This is a Committee of the Dáil——

Who, in turn, have to——

This is where decisions are made and not in the corridors of the Department of Industry and Commerce in Kildare Street. This is the place where decisions should be taken and we should have people in here capable of making decisions.

The Deputies have made their point. As in other cases where a point has been made, undertakings have been given by the Minister to come back to them on Report Stage. The Department may change their minds on this section. It has been indicated that amendments to other sections will be put forward by the Minister on Report Stage which will be properly drafted and similar to the amendments put forward by the Deputies. It is not fair to make a general point in relation to the previous experience of Members of the Opposition on this Committee. We should be in a position to go ahead and deal with other amendments and try to finish this Chapter at the very least. I will agree to leave it at that once we finish this Chapter.

I want to reinforce the point made by Deputy Barrett. I want to ask you, Mr. Chairman, to ensure that when you are setting another meeting of the Committee the Minister who is capable of making decisions and Members from your own party will be present.

I will discuss the matter raised by the Deputies about the Minister being available for all our meetings. He has been here for a number of them and on occasion he has been replaced by the Minister of State at his Department. However on this occasion his Minister of State is not available and we have another Minister of State here. They are far more experienced in Government business than I am and they cannot be in ten places at the one time. I will raise the points that have been made by the Deputies with the Minister.

NEW SECTION.

I move amendment No. 213:

In page 119, before section 150, to insert the following new section:

"150.—The Principal Act is hereby amended by the insertion after section 322 of the following section:

‘322A.—(1) The court may, on cause shown, remove a receiver and appoint another receiver.

(2) In any such proceedings, the receiver and the person who appointed the receiver may appear and be heard.'."

While amendment No. 213 would replace section 150 of the Bill, the only substantive change I am proposing is the addition of a new subsection (2) to the section. Section 150 is quite a straightforward section and simply allows the court to remove a receiver from office, on cause shown, and appoint another receiver. A similar provision has existed for years in the case of liquidators.

Various parties have argued, and we can see merit in the point they are making, that giving the court such a power involves a significant intrusion into the normal practices of commerce. To deal with these concerns and ensure the correct balance, which I have constantly striven to maintain throughout the Bill, we are proposing to temper the right of the court to act on an application under this section by providing that both the receiver whose removal is being sought and the person who appointed him may appear at any such proceedings.

This amendment is undesirable because it could result in a receiver being removed by the court "on cause shown". What does this mean? No indication is given in the Bill as to the reasons a receiver may be removed. We are simply saying the court, if it wants to, can remove a receiver, full stop. The section does not state the grounds a receiver must be prepared to concern himself with if he is to avoid having this section used against him nor does it state who may apply to have him removed. I can only describe this section as a sort of mudslinger's charter in the sense that anybody who does not like the way a receiver is behaving, on any grounds they like, will be able to apply to have him removed. We should not implement legislation that is as vague as this.

This amendment seeks to extend to this Bill the provisions that already exist in section 277 (2) of the Principal Act in relation to liquidators. A similar statutory provision exists in the United Kingdom companies law. In that jurisdiction, the meaning of "on cause shown" arose in a particular case. While the burden lay on the applicant to show cause, it was sufficient to show that the removal was for the general advantage of the creditors and it was not necessary to show misconduct or personal unfitness on the liquidator's part. In the case in question — Keypack Homecare Limited — Mr. Justice Millett believed that the liquidator's conduct up to the point where the application had been made had demonstrated that his removal would be for the general advantage. The judge shared the view that the liquidator's failure to investigate stock discrepancies with any vigour or to initiate proceedings against the former directors revealed a relaxed and complacent attitude which had outraged the creditors who had no faith that the liquidator was likely to pursue the directors with anything like sufficient vigour in the future. The foregoing indicates how the similar provision might be viewed by an Irish court.

I do not think we would disagree that the court should have the power to remove a receiver. What we are saying is that the grounds on which a receiver may be removed by the court should be specified and that the various parties concerned should be notified that this was being considered. The section, as it stands, reads: "the court, may on cause shown, remove a receiver and appoint another receiver". It does not say that one has to give notice that this will be considered or the specific grounds on which the court may remove a receiver. The section should be expanded and account taken of the points being made by both Deputy Bruton and me.

In relation to the question of notice, presumably the normal course of action in the event of a creditor being concerned about the way in which a receiver was doing his job would be for his legal adviser to send a letter stating in the event of no action being taken within 14 days that he would have no option but to make an application to the court.

That may be so but it does not say that.

In practice, that is what would happen. We should not put into the Bill "subject to a solicitor's letter being sent" giving so many days notice. The practice should be that the creditor would give notice that he intends putting him out of his job if he does not buck up.

Surely it should state "for failing to fulfil his statutory responsibilities" rather than simply "on cause shown remove a receiver".

That would be an obvious ground on which to make an application. An added protection for the creditor is that one would not have to await the production of evidence to show that he was failing to fulfil his statutory responsibilities; one would simply need to say he was lacadaisical and not doing the job he was supposed to be doing. On the evidence before them in any individual case, counsel will decide whether they should pursue that course of action.

The points you make are valid. In the past a number of allegations have been made against receivers. The Registrar of Companies has confirmed this although it is very hard to get precise evidence on the kind of situation covered. What we want to do is leave it open enough so that if an interested party is concerned about the activities of a receiver, or lack of activity as the case may be, the court can decide, in the circumstances of the case, to allow the interested party to put forward the reasons they believe the receiver should be removed. The court could then decide. I think it would be impossible to list the activities covered in legislation. They are not listed in section 277 (2) of the Principal Act dealing with liquidators. To restrict it only to the statutory duties of the receiver would very much work against the interests of creditors.

Does the Minister not think that notice should be given to the interested bodies that this section was being considered? As it stands, there is no obligation to give anybody any notice.

An individual creditor might not be aware of all the parties concerned. For instance, the ordinary creditor might not be aware of the various banks, debentures or floating charges involved. His only crib would be with the receiver. Rather than five or seven days' notice, let them give 21 days' notice but to the receiver only. One could not expect them to know all the parties concerned. What an ordinary supplier might be looking for may be small when compared to what other people are waiting for but it means far more to them than it does to some big bank which could wait a month or two.

In an effort to be helpful we will look at the question of notice. Section 151 (3) which deals with the application of the liquidator to have a receiver removed, requires notice to be given. We will consider that before Report Stage.

Applying that to section 150 as well?

Will the Minister state the causes, at least in general terms, a receiver might be removed if only to give receivers some degree of understanding of what their liabilities will be? Obviously, it will have to be phrased fairly generally anyway but the words "on cause shown" are too vague.

I think we can look at that.

Amendment agreed to.

Acceptance of this amendment involves the deletion of section 150.

Section 150 deleted.

SECTION 151.

Amendment 214 in the name of the Minister. Amendment No. 215 is consequential. Therefore I propose we take both amendments together. Is that agreed? Agreed.

I move amendment No. 214:

In page 120, line 20, after "receiver", to insert "and on the person who appointed him".

Section 151 would allow the court, on the application of the liquidator, to restrict, wholly or partly, the powers of a receiver.

When a receiver is appointed, his main function and preoccupation is to realise the security of the person who appointed him. This can, naturally, quite often be to the detriment of others with an interest in the company, for example, employees and other creditors.

Over the years, unsecured smaller creditors have sometimes claimed that receivers "grab-all" and leave nothing for the liquidator to distribute to the remaining creditors where the company eventually goes into liquidation.

The liquidator's function is, of course, quite different from that of a receiver and is to realise the assets and make a distribution in accordance with a well recognised set of priorities. Such priorities take the interests of many parties into account. Therefore it is desirable, in the interest of equity, to provide a mechanism whereby the receiver's powers may be curbed in certain circumstances and that is what this section does.

It is important to point out that the section can only be availed of in circumstances where the liquidator has been appointed by the courts or in a creditor's voluntary winding-up. This means, invariably, that the company is unable to meet all its debts.

As drafted at present, where a liquidator makes an application under this section, the receiver would be served with notice of the application seven days in advance of the hearing and would be empowered to appear before the court considering the application. My amendment will ensure that the person who appointed the receiver will also be notified of the pending application under this section and also be entitled to appear at the court hearing.

The rights of the person who appointed the receiver in the first instance are protected, in that any order made under this section does not affect such a party's security or charge over the undertaking or property of the company.

It comes down to a question of balance and I am happy that we can safely leave it to the courts, where an application is made under this section, to determine where the correct balance lies in any particular case.

Is this section not superfluous in view of the powers given to a liquidator under section 146 of this Bill?

This section gives liquidators the power to have a receiver removed or to have his powers curtailed or restricted whereas section 146 simply gives powers to apply for directions.

The concluding sentence of section 146 (1) says: ". . . the court may give such directions, or make such order declaring the rights of persons before the court or otherwise, as the court thinks just".

We are seeking in this section is to have a power whereby a receiver can be either removed altogether or have his powers curtailed.

Under the provisions of section 146 (1) (b) a liquidator may apply to the court for directions in respect of any matter in connection with the performance or otherwise by the receiver of his functions. If that is the case I do not understand the need for section 151.

The court can only direct——

We have already dealt with the provision, under section 150, for the removal of a receiver. Section 150 deals with the removal. Section 146 deals with directions, so why do we need section 151?

Any party——

This is a specific provision applicable to a liquidator. I am advised that it is more specific, that it is necessary to have a provision relating solely to a liquidator.

I appreciate that or it would not be there — there must have been advice at some stage — but I do not understand the justification for the advice given that section 146 allows for directions to be applied for by the liquidator and section 150 allows everybody, including the liquidator — on the most general grounds — to apply for the removal of the receiver. Why is section 151 required? What is specific about it that is not covered adequately in the other sections?

A liquidator could apply to remove a receiver, simply making it a liquidation, forgetting about the receivership.

If a receiver is removed under this section a liquidator then takes over.

Is that the only difference?

Yes, it is the main difference.

If that is the only difference surely it could have been incorporated as an amendment to one of these two sections rather than introducing this big chunk of verbiage in order to discover a relatively simple difference?

It seems to me that, since we have agreed to look at section 150 again, perhaps we could examine this also in that context, perhaps putting them together if that is possible.

I understand that section 151 is a straight copy derived from the New Zealand legislation. Perhaps we should all go out to New Zealand and ascertain how it works.

Much of our recent legislation has been copied from New Zealand. Perhaps I should second that proposition.

If you want to stand anything on its head that is the place to go.

Amendment agreed to.

I move amendment No. 215:

In page 120, line 21, after "receiver", to insert "and any such party".

Amendment agreed to.
Section 151, as amended, agreed to.