The Court of Appeal in England has unanimously upheld a first instance decision that a Financial Support Direction (FSD) issued by the Pensions Regulator to an entity after it has commenced insolvency proceedings will rank as an expense of the administration, therefore affording it superpriority over floating charge holders and other unsecured creditors. This decision has significant implications for lenders to groups with UK defined benefit pension plans if any of their security is taken as a floating charge.

The Court of Appeal handed down its judgment on 14 October 2011 unanimously upholding the first instance decision that a Financial Support Direction (FSD) issued by the Pensions Regulator to an entity after it has commenced insolvency proceedings will rank as an expense of the administration, therefore affording it super-priority over floating charge holders and other unsecured creditors. This decisions has significant implications for lenders to groups with UK defined benefit pension plans if any of their security is taken as a floating charge.

The UK Pensions Regulator (the Regulator) has just announced that it has reached a settlement with the intended target of its first Contribution Notice (CN), with the result that the CN has been issued, but for a far lower amount than the Regulator originally sought. This case gives important guidance on the situations in which the Regulator believes it will be justified in issuing a CN, and on the potential liabilities targets may face.

The Moral Hazard Powers

Summary

Since April 2005, the UK Pensions Regulator (the Regulator) has had the power to take action, in the form of financial support directions (FSDs) or contribution notices (CNs), against parties that are "connected or associated" with a company that operates a UK defined benefit pension plan. This will typically include all entities in the same group as the employer.

From theory to practice, planning to enforcement, the answers to 42 of the most frequently asked questions can help you prepare, cope or respond to a restructuring. This Client Alert answers some of the most frequently asked questions with respect to the treatment of pension-plan liabilities and other post-employment benefits (OPEB) obligations in US bankruptcies. Understanding the treatment of pension and OPEB obligations in bankruptcy continues to be important in today’s business environment and the law relating to the treatment of these obligations continues to evolve.

Latham & Watkins Benefits, Compensation & Employment Practice June 15, 2015 | Number 1844 FAQ: Recent Developments in US Law Affecting Pension and OPEB Claims in Restructurings (2015)1 From theory to practice, planning to enforcement, the answers to 42 of the most frequently asked questions can help you prepare, cope, or respond to a restructuring. This Client Alert answers some of the most frequently asked questions with respect to the treatment of pension-plan liabilities and other post-employment benefits (OPEB) obligations in US bankruptcies.

Relief for lenders and administrators as UK Supreme Court reverses “super-priority” status of pensions liabilities in insolvency ranking.

Introduction

On 20 May 2020, the UK Government published the Corporate Insolvency and Governance Bill (the “Bill”). The Bill was published in response to Covid-19 with a view to assisting companies and directors through these challenging times.

The Pension Schemes Bill promised in the Queen’s Speech has been introduced into Parliament. At nearly 200 pages the Bill is comprehensive, wide-ranging and ticks many of the boxes on the Pensions Regulator’s wish list. It substantially reflects the Bill which briefly appeared in the autumn: this time, it seems likely to make it to the statute book. The Bill as drafted has potentially far-reaching implications, if it is passed substantially in its current form.

Transactions and restructuring

Pension Schemes Bill – Additional hurdle for English law restructurings?

The intention was that the Pension Schemes Bill would enhance the Pensions Regulator’s powers to respond earlier when employers fail to take their pension responsibilities seriously, targeting “reckless bosses who plunder people’s pension pots”. However, the new criminal offences proposed as part of the Bill may inadvertently create additional hurdles for English law restructurings, making them potentially more expensive and difficult.