Assigning employer debt in insolvency

Assigning employer debt in insolvency

Pensions analysis: What is the significance of the recent decision in respect of the circumstances in which a trustee of a pension scheme can assign the debt owed to the scheme? Alastair Meeks, a partner at Pinsent Masons LLP who worked on the case on the claimant’s side, says the case could be relevant to other forms of statutory debt owed by insolvent companies.

Original news

Trustee of the Singer & Friedlander Ltd Pension and Assurance Scheme v Corbett [2014] EWHC 3038 (Ch), [2014] All ER (D) 248 (Nov)

In the course of the administration of a bank, which ran a pension scheme, the claimant trustee sought a declaration that a debt owed to the pension scheme was assignable. The Chancery Division considered whether the trustee of a pension scheme was able to assign the debt owed to the pension scheme which was created by the Pensions Act 1995, s 75 (PA 1995). It held that, among other things, a declaration to that effect would be made.

What issues were considered in the case?

The scheme has been in winding-up for some time. The employer debt had been certified and the scheme had been receiving payments in the insolvency along with other creditors. It now had the opportunity to sell the remainder of its employer debt and wished to do so if it could secure the right price in order to complete the winding-up expeditiously. Before doing so, it applied to court for directions as to whether the statutory employer debt was capable of being assigned.

What conclusions did the court reach?

The court, after some hesitation, concluded that the debt was capable of assignment and so the trustee could properly sell the debt if it could secure appropriate terms.

What was the court’s reasoning in reaching the particular conclu

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About the author:
Kathy specialises in restructuring and cross-border insolvency. She qualified as a solicitor in 1995 and has since worked for Weil Gotshal & Manges and Freshfields. Kathy has worked on some of the largest restructuring cases in the last decade, including Worldcom, Parmalat, Enron and Eurotunnel.