Energy Bill [HL]

The clauses on special administration in the Bill largely follow the tests and procedures for ordinary administration laid down in the Insolvency Act 1986. If a party applies to the court for an ordinary administration order, the court may grant it if it is satisfied that a company is unable to pay its debts or is unlikely to be able to pay them. Administration under the Insolvency Act 1986 is a business rescue procedure with the survival of the company as its primary objective. If entry to administration were available only to a company that could not pay its debts at the date of commencement, the rescue of viable businesses might be jeopardised. For this reason, administration can be entered also when a company is likely to become unable to pay its debts. The provisions in the Bill apply these same principles to energy supply company administration. They follow the same tests for insolvency as the Insolvency Act. My noble friend’s amendment would require the court to apply a stricter test for insolvency when considering applications for energy supply company administration than it does for applications for ordinary administration. I make it clear that the Secretary of State would apply for an energy supply company administration order only as a last resort and to prevent the risk of financial failure spreading to other companies. I hope that I have reassured my noble friend that we are seeking simply to keep the procedure in line with that which applies elsewhere for other companies. I hope that he will withdraw his amendment.