The latest Court judgment arising from the MF Global UK Ltd ("MF Global") insolvency provides further clarity on how client money entitlements under the FCA's client money rules ("CASS") should be assessed, but is potentially superseded by a key proposal in the FCA's July 2013 Consultation Paper.  In MF Global UK Ltd (No 4) (in special administration); Heis and others v Attestor Value Master Fund LP and another [2013] EWHC 2556 the Court was asked to determine to what extent, an

The Pensions Regulator has issued a statement setting out its approach to Financial Support Directions in insolvency situations.  It follows the Court of Appeal's decision in Bloom v The Pensions Regulator (Nortel) in October 2011 that a liability arising from a Financial Support Direction (FSD), or a contribution notice (CN), issued to a company in administration or liquidation will, except in very limited circumstances, amount to an expense of that administration or liquidation.  As such, it will rank very highly in the payment priority order, in particular rank

In the current economic climate, brokers will find the decision of the High Court in Euroption Strategic Fund Limited v Skandinaviska Enskilda Banker AB[2012] EWHC 584 (Comm) of considerable interest, since it considers the duties of a broker who is conducting a close out and liquidating the position of a client who is in a state of default, in this case for failure to meet margin requirements.   

The Court ruled that:

The Supreme Court handed down its judgment in relation to the client money application in the matter of Lehman Brothers International (Europe) (LBIE). The judgment has a number of implications for firms who hold client money, and for firms who hold money with banks and other firms as clients themselves. The complicated and controversial nature of the appeal is reflected in the sharply opposing opinions of the Lords in relation to two of the three issues considered.

The story of the restructuring of carpet-maker, Brintons has featured in the press recently, with emphasis on the role of Carlyle, one of the world's biggest private equity firms. The facts are similar to the Silentnight pre-pack which we featured in a previous bulletin. In each case, the Pensions Regulator is said to be considering using its anti-avoidance powers under the Pensions Act 2004 to compel senior debt holders to pay towards the deficit of the defined benefit pension scheme operated by the company.

The Pensions Regulator announced this week that it will not  pursue action to impose a Financial Support Direction against US company, Chemtura Corporation and members of its group after a funding settlement, involving the payment of expedited contributions to the pension scheme of its UK subsidiary, was reached with the scheme's trustees.

The story of the Silentnight restructuring has featured in the press today. There have been calls for the Pensions Regulator to use its anti-avoidance powers under the Pensions Act 2004 to compel HIG Europe to pay more towards the considerable deficit of the Silentnight Pension Scheme, following the purchase of Silentnight out of administration by the private equity firm last Saturday. Earlier this year, Silentnight had failed to obtain the PPF's approval to a Creditors Voluntary Arrangement aimed at addressing its historic debt, including a pensions deficit of around £100m.

A claim by trustees against an insolvent participating employer (who has ceased to participate in the pension scheme) for its share of the scheme deficit is a contingent obligation at the date of winding up and is admissible in the winding-up. This follows the decision by the Outer House of the Court of Session in Scotland in Burton, Re Direction of Assets [2010] CSOH 174.

On 17 September, the Pension Regulator's Determinations Panel announced that it had issued a determination that six companies within the Lehman Brothers group (including the group's main operating companies in the UK as well as the US parent Lehman Brothers Holding Inc.) should provide financial support to the Lehman Brothers Pension Scheme. This followed a hearing on 8-9 September 2010.

The Federal Labour Court has ruled on the fundamental issue of who will be entitled to the rights under a life insurance policy concluded by the employer in the employee’s favour in the event that an employment relationship comes to an end in the course of the employer’s insolvency proceeding.