If an employer is affected by an insolvency event the insolvency practitioner or official receiver is obliged to notify the trustees of the employer’s pension scheme, the Pensions Regulator, and the Pension Protection Fund of the fact of the insolvency event. Here, we provide an overview of the pensions issues arising from employer insolvency.

Gowling WLG's finance litigation experts bring you the latest on the cases and issues affecting the lending industry.

Uncrystallised pension pot remains protected following bankruptcy

In a changing economy, companies are constantly facing new challenges, and none are immune to insolvent suppliers or clients.

It is therefore crucial to be able to identify the early warning signs of a company's insolvency and to be aware of the issues that can arise when a client or a supplier becomes insolvent.

When Insolvency Looms on the Horizon

A recent decision of the Tax Court of Canada highlights the benefits of a broadly drafted general security agreement (GSA) in relation to a secured creditor’s realization on a bankrupt borrower’s intangible assets in the form of GST input tax credits (ITCs).

Notice of assignment

Notice of assignment can be given by either the assignee or assignor under the Consumer Credit Act 1974 (CCA).

This was the High Court's finding in Smith v 1st Credit (Finance) Ltd and another. Smith was notified by her credit card company that her credit card debt had been assigned to 1st Credit. 1st Credit wrote to Smith shortly afterwards confirming the assignment and advising how payment could be made. Smith failed to pay and was made bankrupt by 1st Credit which subsequently repossessed and sold Smith's property.

The Insolvency Service has published its policy, which came into effect on 1 December 2010, on realising a bankrupt's principal residence where the Official Receiver (OR) is appointed as the trustee in bankruptcy.

The policy provides that the OR will not take any steps to market the bankrupt's interest in the property for a period of two years and three months from the date of the bankruptcy order. However, the OR can accept any unsolicited offer in relation to the property if it is in the best interest of creditors. After the expiry of the two years and three months:

Justice has to be seen to be done. Without clear reasons from the court as to the decision it reached, a party is entitled to have reheard issues it raised on an earlier application but which there is no evidence the court considered.

A question facing many landlords is whether, when a tenant company faces insolvency and shows no intention of continuing to trade from the premises, they should take back the property and seek to relet it?

There are several key issues here, including:

• rates liability
• mitigating losses
• ability to recover from third parties and former tenants.

A landlord's decision has often turned on the type of insolvency faced by the tenant.

If a liquidator disclaims the lease:

The credit crunch is biting ... your scheme's sponsoring employer is facing insolvency ... what can the trustees and advisors do before the insolvency to lay the foundations for a smooth Pension Protection Fund (PPF) assessment period?

What is a PPF assessment period?

Although this case is about a trustee in bankruptcy’s fight to realise his interest in a property by virtue of a debtor’s bankruptcy, the facts (though extreme) are not untypical of a finance company’s position when a hirer refuses to return goods to it despite the fact the court has ordered the hirer to do so.

In this case Mr Canty was made bankrupt in relation to a relatively small debt and he never accepted the position. There followed a number of appeals and challenges over the following years in which he attempted to reopen and relitigate earlier proceedings.