Summary
Eastman Kodak Corporation (Kodak US), the US parent of the Kodak group, filed for chapter 11 protection in the US on 19 January 2012. It successfully emerged from bankruptcy on 3 September 2013 as a new restructured technology company focused on imaging for businesses. Many other Kodak companies throughout the world were able to avoid following in their parent’s footsteps and were maintained as going concern businesses while the US bankruptcy process was ongoing.
Summary
The Court of Appeal’s judgment in The Trustees of the Olympic Airlines SA Pension & Life Insurance Scheme v Olympic Airlines SA [2013] EWCA Civ 643 has clarified what is required to fall within the definition of an ‘establishment’ for the purposes of the EC Insolvency Regulation (the Insolvency Regulation).
The Court of Appeal decision in the Nortel case upheld the High Court ruling that FSD/CN liability is an expense of the administration and therefore ranks ahead of administrators' remuneration, floating charges and unsecured creditors. Much of the press coverage which has followed in the immediate aftermath seems to have assumed that the decision is a victory for "good" pensioners over the "bad" banks.
The Pensions Regulator (TPR) has issued a statement on Regulated Apportionment Arrangements (RAAs) and employer insolvency.
Employers of multi-employer schemes can use a number of mechanisms under the Employer Debt Regulations 2005 to manage a debt triggered under section 75 of the Pensions Act 1995. Broadly, RAAs can be used in situations where a scheme has entered into a Pension Protection Fund (PPF) assessment period, or is likely to enter into such an assessment period. TPR must approve an RAA.
DWP consults on amendments to the employer-debt regulations
The Pension Protection Fund (PPF) has issued guidance for insolvency practitioners. The guide is intended to provide information on how insolvency practitioners and official receivers should interact with the PPF if a sponsoring employer of an eligible occupational pension scheme suffers an insolvency event and the scheme is assessed for entry into the PPF.
The Pensions Regulator (the Regulator) recently used its powers under the Pensions Act 1995 to appoint an independent trustee to the exclusion of all other trustees of the scheme. The employer was required to pay the fees and expenses relating to the appointment.
The Regulator decided to use its powers because:
Pensions and insolvency legislation uses the test in the Insolvency Act 1986 for assessing whether a person is ‘connected’ or ‘associated’ with another. This test is important because various statutory provisions use it, especially in limiting the persons whom the Pensions Regulator can make responsible for pension scheme deficits under the ‘moral hazard’ powers in the Pensions Act 2004. This briefing gives an outline of the statutory provisions and points to some difficult areas.
Why is this relevant?
We're now at the halfway mark of Pensions in 30 Podcasts and episode 15 provides an overview of the Pensions Protection Fund (PPF). We look at how a scheme qualifies for entry into the PPF, funding and compensation.
Click here to listen to the podcast.
Key Points
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.