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GLOSSARY

Insolvency event definition

Published by a LexisNexis Pensions expert

What does Insolvency event mean?

Where a defined benefit scheme is in deficit, subject to certain conditions, that deficit becomes a debt payable by the employer to the trustees under Pensions Act 1995, s 75 where an insolvency event occurs.

Examples of insolvency events for these purposes (as defined in Pensions Act 2004, s 121) include:

• the company going into administration;

• a voluntary arrangement being entered into with creditors; or

• a resolution is passed for the voluntary winding up of the company.

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Key provisions in a consultancy agreement—checklist

Key provisions in a consultancy agreement—checklist This Checklist sets out the key provisions to consider in a consultancy agreement. This Checklist highlights issues which are relevant to the customer, issues which are relevant to the consultant and issues which are relevant to both parties for inclusion in a consultancy agreement. This Checklist will assist both the consultant and the customer when reviewing and negotiating a consultancy agreement. See also: Taking instructions for a consultancy agreement—checklist. For Precedent consultancy agreements, see: • Consultancy agreement—company and individual—pro-client • Consultancy agreement—company and company—pro-client • Consultancy agreement—individual and company—pro-consultant • Consultancy agreement—company and company—pro-consultancy • Consultancy agreement—company and individual—pro-client (short form) • Side letter to consultancy agreement—company and company—pro-client For further related guidance, see: Consultancy services—overview and Practice Notes: • Managed service companies and the anti-avoidance legislation • Deciding appropriate employment status • Personal service companies—the key benefits and key tax considerations • Securing intellectual property rights from employees and contractors • IR35—the large and public client off-payroll regime—practical considerations for the end client...

Corporate Insolvency and Governance Act 2020—resources for commercial contracts—checklist

Corporate Insolvency and Governance Act 2020—resources for commercial contracts—checklist This Checklist of resources sets out some of the considerations when drafting, reviewing and negotiating commercial contracts to reflect the restrictions on ipso facto provisions introduced by the Corporate Insolvency and Governance Act 2020 (CIGA 2020). Corporate Insolvency and Governance Act 2020—the impact for commercial lawyers CIGA 2020 introduced reforms to the Insolvency Act 1986 (IA 1986) including provisions to ensure the continuity of essential supplies and restrict contractual termination provisions on insolvency (so-called ‘ipso facto’ clauses). The provisions that are of most relevance to general commercial practitioners when drafting and negotiating contracts are: • contractual rights to terminate for an insolvency event, or do any other thing as a result of a customer’s insolvency (so-called ‘ipso facto’ clauses) in contracts for the supply of goods and services are no longer effective • the introduction of a company moratorium available to all companies to allow companies to formulate restructuring proposals without creditor pressure • the introduction of a restructuring plan, being a new...

Discover our 14 Checklists on Insolvency event

The Pension Protection Fund—eligibility and entry

The Pension Protection Fund—eligibility and entry Requirements for PPF entry The requirements for a scheme to enter the PPF are: • the scheme must be an eligible scheme—see: What schemes are eligible? below • either: ◦ a qualifying insolvency event must occur in relation to a scheme employer—see: What is a qualifying insolvency event? below, or ◦ the employer is unlikely to continue as a going concern and it meets the conditions in SI 2005/590, reg 7—see: Alternative route to PPF entry, below • the insolvency practitioner in relation to the employer must confirm that a scheme rescue is not possible—see: Duty of insolvency practitioner to issue notices confirming status of scheme (section 122 notices), and • the assets of the scheme must be less than the 'protected liabilities' (broadly, the benefits that would be payable to members by the PPF)—see: Protected liabilities, below The statutory provisions regarding the eligibility of schemes for entry into the PPF are contained in: • sections 120–168 of the Pensions Act...

Finance party default—lenders

Finance party default—lenders It isn’t only borrowers that can get into financial difficulties. Failure by a lender to meet its lending commitments under a loan agreement could have severe implications for the borrower, who may not be able to meet its own financial commitments. It is also likely to have knock on effects for other lenders who may find the borrower’s ability to make repayments is impacted. The Loan Market Association’s (LMA) recommended form of senior multicurrency term and revolving facilities agreement (compounded rate/term rate) for leveraged acquisition finance transactions (LMA leveraged facilities agreement), and the other LMA leveraged finance facilities agreements, contain provisions to help counteract some of the potential problems that may arise on syndicated facilities in the event that a finance party is at risk of not meeting its obligations. While the LMA recommended forms of investment grade documentation do not include the provisions, parties may decide to include them in other syndicated facility agreements. The standard form documentation is available to LMA members on the...

Discover our 106 Practice Notes on Insolvency event

Retention bond—construction project

Retention bond—construction project Retention bond Schedule Bond number [insert] Dated: Parties 1 The Employer: [insert] incorporated in [England and Wales] (Company Number [insert]) whose registered office is at [insert]. 2 The Contractor: [insert] incorporated in [England and Wales] (Company Number: [insert]) whose registered office is at [insert]. 3 The Surety: [insert] incorporated in [England and Wales] (Company Number [insert]) whose registered office is at [insert]. (A) The Building Contract: the contract dated [insert] between the Employer and the Contractor for the construction of [insert] (the “Works”). (B) Retention: the amount to which the Employer is or (but for the issue of this Bond) would be entitled to deduct by way of retention from any payment due to the Contractor under and in accordance with the terms of the Building Contract. (C) Maximum Bond Amount: The aggregate amount of £[insert] [(until the date of issue of the first interim payment to the Contractor following practical completion of the Works in accordance with the Building Contract whereupon the amount...

Deed of apportionment of liability—Scheme apportionment

Deed of apportionment of liability—Scheme apportionment This Deed is made the [insert day] day of [insert month] 20 [insert year] Parties 1 [insert full company name] registered in England and Wales with company number [insert number] and having its registered office at [insert registered company address] (the “Receiving Employer”); and 2 [[insert full name of company] registered in England and Wales with company number [insert number] and having its registered office at [insert registered company address] OR [insert individual name(s)] of [insert individual address(es)]] (the ‘Trustees’). Background: (A) [Insert full name of scheme] (the “Scheme”) was established by an [interim OR definitive] deed dated [insert date]. (B) The Scheme is currently governed by a trust deed dated [insert date], as amended by the deeds executed after it[, details of which are set out in Schedule [insert] to this Deed] (the ‘Trust Deed’). The rules of the Scheme (the ‘Rules’) are set out in Appendix [insert] to the Trust Deed. (C) The Trustees are the present trustees of...

Dive into our 4 Precedents related to Insolvency event

What should be taken into account when drafting a contract for the supply of goods or services in light of statutory controls on rights in the event the customer is subject to an insolvency procedure including under the new Corporate Insolvency and Governance Act 2020?

What should be taken into account when drafting a contract for the supply of goods or services in light of statutory controls on rights in the event the customer is subject to an insolvency procedure including under the new Corporate Insolvency and Governance Act 2020? Restriction on termination clauses in supply contracts The Corporate Insolvency and Governance Act 2020 (CIGA 2020) introduces a permanent change to the use of termination clauses in supply contracts by introducing a new provision, section 233B, into the Insolvency Act 1986 (IA 1986). As a result of the measure, where a company has entered an insolvency or restructuring procedure or obtains a moratorium, the company’s suppliers of goods and services (with certain prescribed exceptions) will not be able to rely on contractual terms to terminate the contract, stop supplying, or vary the contract terms with the company (for example—increasing the price of supplies). The customer is required to pay for any supplies made once the insolvency process has commenced, but is not required to...

There is a retention of title clause incorporated into a contract between a buyer and seller for the supply of goods. The buyer is now in liquidation. The buyer was previously making payment by installments and these part payments comprise approximately 50 per cent of the total sum due under the contract. If the liquidator returns the goods to the seller, does the seller need to refund the sum of the part payments to the buyer? Is the buyer entitled to reimbursement of the sums paid and, if so, what is the process?

There is a retention of title clause incorporated into a contract between a buyer and seller for the supply of goods. The buyer is now in liquidation. The buyer was previously making payment by installments and these part payments comprise approximately 50 per cent of the total sum due under the contract. If the liquidator returns the goods to the seller, does the seller need to refund the sum of the part payments to the buyer? Is the buyer entitled to reimbursement of the sums paid and, if so, what is the process? A retention of title (ROT) clause is a provision in a contract which allows the seller to retain title to goods which it has delivered to a buyer until the buyer has paid for them in full or, where permitted to do so, sold them on to a third party (see Aluminium Industrie Vaassen BV v Romalpa Aluminium Ltd). A retention of title clause is sometimes referred to as a...

See the 21 Q&As about Insolvency event

Corporate weekly highlights—23 February 2023

This week's edition of Corporate weekly highlights includes PERG’s publication of the Private Equity Annual Public Reports, analysis of a case examining whether a private equity investor invoking enhanced voting rights upon the insolvency of an investee company amounted to unfair prejudice, the Investment Association’s release of updated share management guidelines as well as their publication of a report on shareholder priorities for 2023 and the Takeover Panel’s publication of a revised version of the Takeover Code.