4 May 2021: Argyll opens Leeds office

17 Jun 2020: TPR updates Contribution Deferral guidance

5 Aug 2019: TPR's tougher stance on recovery plans

7 Mar 2019: TPR’s Annual Funding Statement a game-changer

7 Dec 2018: DWP publishes superfund consultation

26 Jun 2017: TPR agrees settlement with Coats

30 Apr 2017: PM promises TPR M&A powers

28 Feb 2017: TPR agrees settlement with Sir Philip Green

9 Nov 2016: Brexit so far

8 Nov 2016: BHS ripple effect

2 Nov 2016: Sir Philip Green sent warning notice

1 Nov 2016: Argyll Financial becomes Argyll Covenant

3 Oct 2016: Tata Steel update

2 Jun 2016: BHS to be liquidated

29 Mar 2016: Tata plans sale of UK Steel

3 Sep 2015: TPR takes dim view of late valuations

13 Aug 2015: New TPR covenant guidance

28 May 2015: Contribution notice in Carrington Wire case

22 Dec 2014: Third warning notice for Guinness Peat

18 Dec 2014: New PPF rules for Asset-Backed Contributions

19 Aug 2014: TPR announces Lehman Brothers settlement

10 Jun 2014: TPR publishes revised funding code

27 Mar 2014: EC postpones holistic balance sheet

20 Mar 2014: PPF announces new insolvency risk model

17 Mar 2014: PPF guarantees harder to certify

7 Feb 2014: Argyll Financial submits consultation response

2 Dec 2013: Regulator publishes new draft funding code

19 Nov 2013: Asset-backed contributions guidance from TPR

22 Oct 2013: FSD warning helps MF Global scheme buyout

10 Sep 2013: TPR supportive of Kodak restructuring

31 Jul 2013: Schneider Electric acquires Invensys for £3.4bn

24 Jul 2013: Supreme Court overturns FSD super-priority

8 May 2013: Support for employers in TPR's Statement

24 Jul 2013: Supreme Court overturns FSD super-priority

The Court held an FSD against an insolvent company would rank as a provable debt with other unsecured claims, overturning prior judgements which gave FSD claims super-priority status.

Administrators of both Lehman Brothers and Nortel Communications had applied to the Court for directions as to how a potential liability under a Financial Support Direction (‘FSD’) should be treated where the FSD is issued after the target had gone into administration. 

Previously, the High Court and the Court of Appeal had concluded that a liability under an FSD issued after insolvency ranked as an ‘expense’, meaning it should be settled from the assets before any distributions to creditors.  Therefore even though a Section 75 debt payable on insolvency would rank as an unsecured creditor, if the Pensions Regulator issued an FSD after an insolvency event, it would effectively move the FSD liability up the order of priority.

However the Supreme Court overturned the previous decisions and confirmed that an FSD issued after the insolvency event should be treated as a ‘provable debt’. That is, it would rank equally with other unsecured creditors.

TPR welcomed the clarity brought by the judgement, even though for a time it looked as though pension schemes might be treated more favourably on insolvency where an FSD could be issued.  Stephen Soper, TPR's executive director for defined benefit funding said:

“We are pleased that the Supreme Court has decided that an FSD issued against an insolvent target is effective. This will be welcome news for many thousands of pension scheme members and will provide clarity to insolvency practitioners on how to treat a pension scheme liability.”

Argyll comment:  if the Supreme Court had upheld the previous judgements it would have improved pension schemes’ recoveries on insolvency where an FSD could be issued.  However the prior judgements were controversial and would have disadvantaged other creditors considerably given the pension debt is often the largest creditor.  It also seemed illogical that an FSD issued before insolvency would have a lower priority than one issued after the event.  The outcome therefore seems fair even if for a short while pension schemes looked as though they might have been handed an advantage.

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