In this August edition of the Pensions E-Bulletin, we look at the Pensions Regulator’s statement on its approach to financial support directions (FSDs) in insolvency situations, the shortened guidance on incentive exercises issued by Pensions Regulator following the publication of the industry code of good practice as well as noting the updated guidance on multi-employer scheme departures and the consultation by the Takeover Panel on proposals relating to pension scheme trustees. 

FSDs and insolvency – the Regulator’s statement

In the current economic climate, landlords are having to deal more frequently with tenants who are in administration. Where the administrators of the tenant are using the property for the purposes of the administration, the moratorium on forfeiture and irritancy proceedings that applies in administrations means that the landlords are unlikely to be able to recover the property in order to relet it.

There has been no shortage of victims in this financial crisis. Pensions and retirement savings have been severely reduced, jobs have been lost and once powerful financial institutions have failed. But, there is, perhaps, another victim that has largely gone unnoticed: the rule of law.

In his Evil Empire speech before the British House of Commons in June 1982, President Ronald Reagan refocused American political values on the rule of law.

The recent downturn in the economy is undoubtedly having an adverse effect on the cash flows of a large number of businesses in the UK. Businesses are keeping a much closer eye on outgoings and expenses, and may be looking to ease financial pressure by making payments due to creditors as late as possible.

For a business operating from leased premises, quarterly rental payments are likely to be one of the biggest outgoings. The longer the rental payment remains in the tenant's bank account, the more interest they will accrue and the more likely that cash flow issues will be eased.

Given the state of the economy, it will not be a rare occurrence in the short term for a supplier to receive a request to sell and deliver further goods to a purchaser who has filed proceedings under the Companies Creditors Arrangement Act (CCAA) or Chapter 11 of the United States Bankruptcy Code — and who is already indebted for unpaid pre-filing sales.

On December 14, 2007, Bill C-12 was given Royal Assent. The Bill involves a comprehensive reform of Canada’s insolvency system. A key component of these reforms was the creation of the Wage Earner Protection Program (WEPP). The WEPP provides statutory wage protection for workers when a) their employer becomes bankrupt or subject to a receivership, and b) their employment is terminated as a result.