Q&As

In a company which had a ‘multi-employer’ pension scheme, the administrators are willing to admit the scheme trustee’s debt (based on a valuation of the deficit including a section 75 (of the Pensions Act 1995) certificate). Must the administrators also accept the Pension Protection Fund’s subsequent claim for the entirety of the deficit (ie including all the deficits of all the employers as against only one of them)?

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Produced in partnership with Caroline Clark
Published on LexisPSL on 10/07/2019

The following Restructuring & Insolvency Q&A produced in partnership with Caroline Clark provides comprehensive and up to date legal information covering:

  • In a company which had a ‘multi-employer’ pension scheme, the administrators are willing to admit the scheme trustee’s debt (based on a valuation of the deficit including a section 75 (of the Pensions Act 1995) certificate). Must the administrators also accept the Pension Protection Fund’s subsequent claim for the entirety of the deficit (ie including all the deficits of all the employers as against only one of them)?
  • Double proof in the administration
  • Can a company in a multi-employer scheme be liable for the debts of all its employers?

Double proof in the administration

Administrators may make distributions to creditors of a company in administration either to: preferential creditors, unsecured creditors from the prescribed part under section 176A of the Insolvency Act 1986 (IA 1986), or otherwise unsecured creditors with the permission of the court.

If it is appropriate for the administrators to agree the claims of creditors in this case, then the administrators should first of all establish who may make a claim in respect of the deficit by finding out what type of pension scheme it is. The Pension Protection Fund (PPF) deals with eligible defined benefit schemes and if the pension scheme is not an eligible defined benefit scheme then the PPF does not have the authority to make a claim in respect of the deficit; it would be for the trustees to make this claim.

Section 137(2) of the Pensions Act 2004 (PA 2004) states that the PPF takes over the creditor rights of the trustees of an eligible defined benefit scheme on the event of a qualifying insolvency event. The definition of a qualifying insolvency event for a company under PA 2004, s 121(3)(d) includes the company entering into administration under IA 1986, Sch B1, para 1(2)(b).

If, therefore, it is an eligible defined benefit scheme, in this case the trustees would have lost the right to make a claim in respect

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