TPR has published a report detailing its investigation into the Carrington Wire Defined Benefit Pension Scheme, and a decision to issue a £382,000 contribution notice against an individual who took control of the sponsor.
In January this year TPR announced that an £8.5 million settlement had been reached with two Russian businesses, PAO Severstal and OAO Severstal-Metiz. Large Russian steel and mining group Severstal had acquired the sponsor, Carrington Wire Ltd, in 2006 and as part of the transaction had provided a guarantee in relation to Carrington’s pension obligations. The guarantee contained a proviso that it would fall away if Severstal ceased to be associated with the sponsor.
In 2008 Severstal began to look at options to exit Carrington Wire. In 2010 Carrington’s assets were transferred to Russia and the business was effectively wound down. In June 2010, without consulting the Trustees, Severstal sold Carrington to Gillico Ltd (a shell company owned by Richard Williams) for £1. Included in the sale was a purported ‘working capital adjustment’ of £400,000, the majority of which was received by Mr Williams personally. The guarantee therefore fell away and the Scheme was reliant on the covenant of Carrington which had been wound down.
TPR issued warning notices to the two Severstal companies and Mr Williams in November 2012. The £8.5 million settlement reached with Severstal was less than the £17.7m originally sought by TPR, and insufficient to keep the Scheme out of the PPF. However TPR took into account the fact that the Russian companies had no assets in the UK and took specialist advice on the enforcement of contribution notices in the Russian courts.
In April this year, the Determinations Panel ruled that a notice should be issued to Mr Williams.
Argyll comment: As ever a reminder that the overseas enforceability of contribution notices is still largely untested. Also a cautionary reminder for employers where weak guarantees are used as a means for a future abandonment of a pension scheme.
