In 1907, Robert Baden-Powell, an English soldier, devised the Scout motto: Be Prepared. Upon hearing the Scout motto, someone asked Baden-Powell the inevitable follow-up question.
“Prepared for what?”
“Why, for any old thing,” he replied.
In Scouting for Boys (published in 1908), Baden-Powell wrote that to ‘Be Prepared’ means “you are always in a state of readiness in mind and body to do your duty.” More than a century later, preparedness is still a cornerstone of Scouting.
HERBERT SMITH FREEHILLS
Pension Disputes Bulletin
Welcome to the latest edition of our regular pension disputes bulletin. In these bulletins we report on key cases, Ombudsman decisions and regulatory activity and we highlight emerging risks for pension schemes, providers, sponsors, administrators and other service providers.
In a hurry? In a hurry? Read the `Risk warning', `Takeaways' and `Comment' boxes to find out the key risks, points to note and to read our observations on each case/ development.
MAY 2022
In Algeri, in the matter of WBHO Australia Pty Ltd (Administrators Appointed) [2022] FCA 169, the Federal Court heard the second application by the administrators who were seeking an extension to the convening period for the second meeting of creditors, which pursuant to section 439A(5) of the Corporations Act 2001 (Cth) (the Act) was set to expire on 24 March 2022.
In the matter of Carna Group Pty Ltd v The Griffin Coal Mining Company (No 6) [2021] FCA 1214, the Court held that Griffin Coal Mining Company (Griffin) was insolvent, without having to prove so under the section 95A Corporations Act 2001 (Cth) (Corporations Act). This was in accordance with a contractual provision where it provided specific circumstances where insolvency could be proven and as such a breach had occurred and the contract could be terminated.
The Court of Appeal has held that the Electronic Money Regulations 2011 do not impose a statutory trust in respect of funds received from e-money holders (who nonetheless enjoy priority status in respect of their creditor claims), providing some much-needed clarity on this issue for e-money institutions and their clients.
A link to the judgment can be found here.
Background
In the recent Court of Appeal case of Re Ipagoo LLP, the court provided welcome clarity on the status of e-money holders’ claims under the Electronic Money Regulations 2011 (EMR). In brief, the Court of Appeal held that the EMR do not impose a statutory trust in respect of funds received from e-money holders. The court confirmed, however, that e-money holders will still enjoy priority status in respect of their e-money creditor claims (crucially) whether or not their funds have been duly segregated from the general pool of assets, as required under the EMR.
Celebrated WWII leader, General George Patton, once said “Do not try to make circumstances fit your plans. Make plans that fit the circumstances.” Unfortunately, it’s advice that is not being fully heeded, according to the FCA’s latest thematic review on wind-down planning The FCA has concluded that “significant further work” is needed to ensure wind-down plans are credible and operable, and has urged all firms to ensure adequate procedures and resources (both financial and non-financial) are in place.
The Financial Conduct Authority has announced this week that Insolvency Practitioners at Teneo Financial Advisory Limited have been appointed as special administrators following Sberbank CIB's entry into special administration.
In the recent case of Baker v Financial Conduct Authority (Re Ipagoo LLP) [2022] EWCA Civ 302 the Court of Appeal has given useful guidance on the interaction of the Electronic Money Regulations 2011 (EMRs), which implemented the EU Electronic Money Directive (EMD), with the Insolvency Act 1986 (the 1986 Act), in respect of the status and basis of the Asset Pool, and the waterfall of payments where there is a distribution from an insolvent estate.
In a hearing yesterday, 6 April 2022, the High Court considered an application of the directors of VTB Capital PLC (VTB UK) for the appointment of Teneo Financial Advisory Limited as administrators.
In what Mr Justice Fancourt described as “an unusual case in all sorts of ways”, the English High Court was faced with a number of questions relating to how the UK’s insolvency regime can interact with the sanctions packages introduced in response to Russia’s invasion of Ukraine.