A recent overruling by the Supreme Court has revoked the
priority status of pension schemes issued with a Financial Support
Direction (FSD) or Contribution Notice (CN) by the Pensions
Regulator, following an insolvency event. Whilst the decision
largely affects companies operating within England and Wales,
Scottish Courts are expected to be guided by the ruling.
Previous decisions of both the High Court and Court of Appeal
afforded a special 'super priority' status to pension
schemes that were the subject of an FSD or CN. This 'super
priority' status granted preferential creditor status (and
protection) to pension schemes during the insolvency process
– a position that would normally only be assigned to
administrators for their fees.
The new ruling
Following the Supreme Court's ruling, FSDs and CNs will no
longer be treated as a priority. Instead they will be
reclassified as 'provable debt' – and will rank
alongside general unsecured claims during insolvency
The Supreme Court has stated that much of the reasoning behind
its decision lies within specific provisions, relating to
'provable debt', within the Insolvency Rules
1986. In Scotland, however, companies are governed by
the provisions of the Insolvency (Scotland) Rules 1986
and, although expected to be directed by this ruling, can proceed
upon a very different basis.
The material contained in this article is of the nature of
general comment only and does not give advice on any particular
matter. Recipients should not act on the basis of the information
in this e-update without taking appropriate professional advice
upon their own particular circumstances.
To print this article, all you need is to be registered on Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
There have been several helpful decisions and comment by the English court on the question of jurisdiction over directors of overseas companies in the context of wrongful trading, directors' duties, and disqualification.
Following upon the November judgment in Re APCOA Parking Holdings GmbH, last week Mrs. Justice Rose sanctioned a scheme of arrangement between DTEK Finance B.V. and holders of notes issued by DTEK in 2010.
The Privy Council gives credence to the concept of "modified universalism" (being the court’s common law power to assist foreign winding up proceedings) and notes some of the circumstances which would permit a "stranger" to a winding up order the opportunity to challenge that order.
Witnesses can, in various circumstances, be subpoenaed by the Courts of overseas jurisdictions to attend to give evidence by way of depositions within that jurisdiction. So why not take that one step further and ask a foreign court to subpoena the witness to give evidence by live satellite video link to a Court in London? This would be the next best thing to having the witness present in Court. Indeed, the Commercial Court is increasingly amenable to evidence being given in this way (albeit on a