Bloom & Ors v The Pensions Regulator (Nortel, Re) [2010] EWHC 3010 (Ch) (10 December 2010)

Bloom & Ors v The Pensions Regulator (Nortel, Re) [2010] EWHC 3010 (Ch) (10 December 2010)

Liabilities arising from Financial Support Directions or Contribution Notices issued after a company enters administration or liquidation are not provable debts in the insolvency, nor are they administration expenses. Such liabilities are only payable out of any surplus remaining after payment in full of all unsecured creditors. Parliament did not intend to confer super-priority on these liabilities, and to do so would undermine the rescue culture and the pari passu principle at the heart of insolvency law.

Citation
[2010] EWHC 3010 (Ch)
Parties
Applicant: Alan Robert Bloom; Applicant: Alan Michael Hudson; Applicant: Christopher John Wilkinson Hill; Applicant: Stephen John Harris; Applicant: David Martin Hughes; Respondent: The Pensions Regulator; Respondent: Board of the Pension Protection Fund; Respondent: Nortel Networks UK Pension Trust Limited; Applicant: Anthony Victor Lomas; Applicant: Steven Anthony Pearson; Applicant: Michael John Andrew Jervis; Applicant: Dan Yoram Schwarzmann; Applicant: Derek Anthony Howell; Respondent: Peter Anthony Gamester; Respondent: Brian Seward; Respondent: Peter Sherratt; Respondent: Thomas Paul Bolland; Respondent: Lehman Brothers Holdings Incorporated; Respondent: Neuberger Berman Europe Limited (formerly Lehman Brothers Asset Management (Europe) Limited)
Jurisdiction
England and Wales
Judgment Date
10 December 2010
Procedural Posture
Applications for Directions by Administrators in Insolvency Proceedings / First Instance Judgment in High Court (chancery Division, Companies Court)
Outcome
Applications for directions answered: liabilities arising from FSDs or CNs issued post-insolvency are not provable debts or expenses, but are payable only out of any surplus after unsecured creditors are paid in full.
Legal Topics
Financial Support Directions, Contribution Notices, Priority of Claims in Insolvency, Section 75 Pensions Act 1995 Debt, Administration Expenses, Provable Debts, Insolvency Act 1986, Pensions Act 2004
Insolvency Pensions Company Law Financial Support Directions Contribution Notices Priority of Claims in Insolvency Section 75 Pensions Act 1995 Debt Administration Expenses +3 more

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Parties

Alan Robert Bloom

Applicant

Alan Michael Hudson

Applicant

Christopher John Wilkinson Hill

Applicant

Stephen John Harris

Applicant

David Martin Hughes

Applicant

The Pensions Regulator

Respondent

Board of the Pension Protection Fund

Respondent

Nortel Networks UK Pension Trust Limited

Respondent

Anthony Victor Lomas

Applicant

Steven Anthony Pearson

Applicant

Michael John Andrew Jervis

Applicant

Dan Yoram Schwarzmann

Applicant

Derek Anthony Howell

Applicant

Peter Anthony Gamester

Respondent

Brian Seward

Respondent

Peter Sherratt

Respondent

Thomas Paul Bolland

Respondent

Lehman Brothers Holdings Incorporated

Respondent

Neuberger Berman Europe Limited (formerly Lehman Brothers Asset Management (Europe) Limited)

Respondent

Procedural Posture

Applications for Directions by Administrators in Insolvency Proceedings / First Instance Judgment in High Court (chancery Division, Companies Court)

Legal Issues

  1. 1 Whether liabilities arising from Financial Support Directions (FSDs) or Contribution Notices (CNs) issued after the commencement of administration or liquidation are provable debts, administration expenses, or non-provable claims in the insolvency of the target company.
  2. 2 Whether the FSD regime applies to companies in administration or liquidation and, if so, with what priority in the insolvency process.

Ratio Decidendi

Liabilities arising from Financial Support Directions or Contribution Notices issued after a company enters administration or liquidation are not provable debts in the insolvency, nor are they administration expenses. Such liabilities are only payable out of any surplus remaining after payment in full of all unsecured creditors. Parliament did not intend to confer super-priority on these liabilities, and to do so would undermine the rescue culture and the pari passu principle at the heart of insolvency law.

Court Disposition

Applications for directions answered: liabilities arising from FSDs or CNs issued post-insolvency are not provable debts or expenses, but are payable only out of any surplus after unsecured creditors are paid in full.

Orders

  • Declaration that FSD/CN liabilities issued after the commencement of administration or liquidation are not provable debts or administration expenses.
  • Direction that such liabilities are payable only out of any surplus remaining after payment of all unsecured creditors.