The Government is proposing to amend (for a twelfth time!) the Regulations under s75 Pensions Act 1995. The amendments would make it easier to vary the basis on which liability is shared between employers.
Background – the Regulations as they stand
The Pensions Regulator (TPR) has announced that it has withdrawn moral hazard proceedings against Chemtura Manufacturing UK Limited and its US parent, Chemtura Corporation. This follows an agreement being reached by Chemtura with the trustees of the Great Lakes UK Limited Pension Plan (the Plan) over its funding package.
The case of White v Davenham Trust Ltd, has reaffirmed that a creditor can choose its own method of enforcing a debt which has been guaranteed even where it might hold security for that debt.
In relation to the Great Lakes UK Limited Pension Plan a settlement was again reached before a full hearing with the Determination Panel could take place as reported by tPR on 13 July 2011.
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
Introduction
Introduction
The Court of Appeal has confirmed the High Court's decision that the "Balance Sheet Test" (for whether a company is unable to pay its debts under Section 123(2) of the Insolvency Act 1986) cannot be reduced to a single formula or set of principles that apply to all companies.
The Balance Sheet Test forms part of the provisions that regulate when a company may be compulsorily wound up by the Court.
In BNY Corporate Trustee Services Ltd v Eurosail UK 2007 - 3BL PLC & Ors, the English Court of Appeal has decided that the mere fact that a company’s aggregate liabilities exceed its assets may not render the company to be deemed unable to pay its debts under section 123(2) of the UK Insolvency Act 1986 (commonly referred to as the “balance sheet test”). The test is whether a company has reached a point of no return such that its state of affairs is not or is unlikely to continue having regard to its contingent and future liabilities.
The EAT has held that employees of a business will transfer to the buyer of that business, even where the business is in administration, as long as there has been a 'relevant transfer'.