The purchase and sale of assets by a debtor is governed by Section 363 of the Bankruptcy Code. So-called “363 sales” are typically attractive from a buyer’s perspective (and may be a primary reason for a bankruptcy filing). Perhaps the most important benefit afforded to buyers in 363 sales is the ability to acquire assets “free and clear” of claims and interests of third parties.

In February this year, Squire colleagues Paul Muscutt and Helen Kavanagh wrote about the Carrington Wire Defined Benefit Pension Scheme, where  the UK Pensions Regulator accepted a payment of £8.5m to settle warning notices of £17.7m issued to Russian companies that had guaranteed sums due from Carrington Wire to the Scheme (“the Guarantee”).

Two documents on winding up procedures have recently been released for consultation. The first is a joint statement by the Pensions Regulator, the Pension Protection Fund and the DWP in respect of the Financial Assistance Scheme on the regulation of schemes in wind up and in a PPF assessment period. The second is a set of good practice guidelines from the Pensions Regulator on avoiding delays in the winding up of schemes.

The UK’s Pension Protection Fund (PPF) is about to publish new guidelines to reflect their increased focus on the approval of Insolvency Practitioner’s (IPs) fees. The guidelines require IPs to provide more regular detail of accruing and anticipated costs to the PPF when they are appointed over employers where Defined Benefit (Final Salary) pension schemes are significant creditors. More specifically IPs will now be required to provide a more detailed explanation of how their proposed remuneration reflects the value provided to creditors.

In the United Kingdom, the Pension Protection Fund (“PPF”) is the safety net for the employee members of a defined benefit pension plan or scheme.  The PPF compensates members when an employer has not and cannot put sufficient assets in the pension scheme to meet its obligations to member employees and the employer has suffered a “qualifying insolvency event”.

Bankruptcy Judge Chris Klein recently issued his formal confirmation opinion in Stockton’s Chapter 9 bankruptcy case. While there were no real surprises, the opinion makes for entertaining reading given the Court’s more than serious conclusion that:

Carrington Wire Defined Benefit Pension Scheme was set up for the benefit of the employees of Carrington Wire Limited; a Yorkshire based company engaged in the sale and supply of steel and wire products. Carrington, which started to wind down its business at the end of 2009, was at that time owned by Severstal, a Russian based international steel company. The scheme’s liabilities were guaranteed by Severstal’s parent company.

The recent English High Court decision in Horton v Henry [2014] EWHC 4209 (Ch)has conflicted with the earlier decision in Raithatha v Williamson [2012] EWCA Civ. 799 and leaves the law unclear as to whether a debtor’s pension forms part of their bankruptcy estate.

A trustee in bankruptcy’s entitlement to seek an income payments order (“IPO”) in respect of a bankrupt’s income is governed by section 310 of the Insolvency Act 1986 (the “IA”). Under section 310(7) of the IA the income of a bankrupt:

Last Friday, the Sixth Circuit postponed oral argument in some of the pending cases in the appeal from the bankruptcy judge’s decision that Detroit was entitled to creditor protection under Chapter 9 of the U.S. Bankruptcy Code and could try to alter the terms of workers’ pensions. The postponement was apparently granted to allow various pension groups to settle with the city.

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