The Supreme Court’s landmark decision in Harrington v. Purdue Pharma L.P. – holding that the Bankruptcy Code does not authorize the release of third-party claims against non-debtors in a reorganization plan without the consent of the affected claimants – will have a lasting impact on mass tort bankruptcy cases and likely nullifies one of the primary benefits of the so-called “Texas Two-Step” strategy: obtaining third-party releases of the debtor entity’s non-debtor affiliates.

In a recent decision, the Second Circuit held that only parties with the right to pursue a breach of contract claim under an executory contract or unexpired lease have the right to demand a cure payment in the event the executory contract or lease is assumed by a debtor in bankruptcy, affirming previous decisions by the bankruptcy and district courts, and limiting the scope of Bankruptcy Code § 365(b)(1)(A).

Pension Protection Fund: valuation assumptions

The PPF has consulted on changing the assumptions used for section 143 valuations (used for schemes  in assessment periods) and section 179 valuations (used when setting a scheme's risk-based levy).   The PPF expects that the proposed changes would increase section 143 and section 179 liabilities by  just under 4% and would potentially lead to a small increase in the number of schemes transferring  to the PPF.

Pension Protection Fund: insolvency risk provider

HIGHLIGHTS

The credit crunch caused problems for businesses at the same time as the value of pension scheme assets plunged, adding ballooning defined benefit pension deficits to the woes of struggling companies.

Company insolvencies, and attempts at restructuring to avoid insolvencies, can have a significant impact on the pension schemes sponsored by those companies. The pensions issues can also act as a significant obstacle to restructuring.

Proposals issued October 2010

Confirmation given 31 January 2011

Policy statement issued May 2011

Draft guidance on the bespoke measurement of investment risk issued May 2011. Consultation ends on 24 June 2011

Consultation on the 2012/13 levy determination expected in autumn 2011

The PPF has confirmed its intention to implement a new levy framework from 2012/13. Key features of the framework confirmed in the policy statement include: