UK Supreme Court upholds appeal by Nortel Administrators on pension liabilities and the powers of the Pensions Regulator

The Supreme Court has today ruled on the ranking of certain pension liabilities when issued to companies in administration or liquidation.

In a decision that will have significant consequences for lenders to groups of companies that have a defined benefit pension scheme, the ability to restructure such groups, and the rescue culture in general, the Supreme Court overturned earlier decisions of the High Court and Court of Appeal, finding that a Financial Support Direction or Contribution Notice issued by the Pensions Regulator against a company after it had gone into administration or liquidation will not have priority ranking as an expense of the insolvency proceedings and will instead rank as a provable debt.

Herbert Smith Freehills partners Kevin Pullen and Stephen Gale, assisted by Gawain Moore and Aoife Gannon and Pensions partner Roderick Morton, advised the Nortel Administrators on their successful appeal in this case.

For a link to the judgment, please click here.

For the full background to the case and details and comments on the judgment, please click here.