My Lords, I am glad to have this opportunity to debate Chapter 11, and am only sorry that some other noble Lords are not here to join in that debate—but we did, of course, have a good discussion in our open meeting, which the noble Lord, Lord Stevenson, kindly attended. I think that the conclusion of that was that we could not adopt the process here—and I do not think that anybody is
asking for that. There is no hard evidence to suggest that if adopted here, it would produce better outcomes for businesses or creditors than the current procedures. Critics have suggested that its higher costs would make it less successful at rescuing small companies. In a sense, as we are talking about the small business Bill, that is not the sort of thing that we are looking for today.
However, I was glad to hear the suggestions from the noble Lord, Lord Stevenson, about aspects of Chapter 11 that we might take on board. In that spirit, I will look in detail at the specific points that he has suggested. We had our own look, and there are some things that we think could benefit the UK rescue regime. For example, we have recently consulted on widening the list of essential suppliers that must continue to supply the company in administration. That is a key feature of the Chapter 11 model. Previous consultations on other aspects of Chapter 11 have not attracted stakeholder support, but again the key is to find the aspects that are valuable and then one might get a more positive answer.
The noble Lord, Lord Stevenson, was concerned about breathing space for distressed companies. Such companies being rescued, in many cases upstream of formal insolvency, avoids the costs of insolvency. I think that our administration system already provides the breathing space that we need to help companies to restructure. In addition, insolvency legislation already provides a breathing space for small companies considering a voluntary arrangement, which we have not discussed today, but obviously that is another aspect of the overall issue.
The final point that I was going to refer to is one that occurred to us in looking at the noble Lord’s amendment, which is concerned with innovation by smaller micro-tech businesses, and the fact that they are key drivers of growth and economic prosperity for the country. We found in our other discussions on IP that the valuation of intellectual property is a challenge, and obviously it is also important when trading is difficult when you get to administration or indeed insolvency. The Intellectual Property Office is developing a new toolkit to help businesses to better manage their intellectual property, which is going to be launched before the end of this Parliament. Following Second Reading, I encouraged the Insolvency Service and the Intellectual Property Office to get together and have a work programme to engage with the insolvency profession to ensure that, if insolvency occurs, valuable intellectual property assets are recognised and dealt with in the best way possible.
A final area that we could put on our list of good ideas is that where formal insolvency cannot be avoided, our fast, accessible out-of-court insolvency procedures should suit small businesses by avoiding many of the court costs associated with other regimes. I do not know that much about the American regime but I know that there is a substantial legal profession there, so if one were looking for change, that would be another important area.
I am grateful to the noble Lord for this debate; I am sorry that it has been a bilateral one, but I hope that some of the things I have said will reassure him and that he will feel able to withdraw his amendment.