Bloom & Ors v The Pensions Regulator & Ors

Bloom & Ors v The Pensions Regulator & Ors

Liabilities under a contribution notice issued pursuant to a financial support direction under the Pensions Act 2004, where the process is initiated after the company enters administration or liquidation, are not provable debts because no relevant obligation exists before insolvency. However, such liabilities are payable as expenses of the administration or liquidation, as they are statutory liabilities imposed on the company during insolvency and constitute necessary disbursements under the Toshoku principle.

Parties
Appellants (nortel Administrators): Alan Robert Bloom, Alan Michael Hudson, Christopher John Wilkinson Hill, Stephen John Harris, David Martin Hughes; Appellants (lehman Administrators): Anthony Victor Lomas, Steven Anthony Pearson, Michael John Andrew Jervis, Dan Yoram Schwarzmann, Derek Anthony Howell; Respondent: The Pensions Regulator; Respondent: Board of the Pension Protection Fund; Respondent: Nortel Networks UK Pension Trust Ltd; Respondents (lehman Pension Fund Trustees): Peter Anthony Gamester, Brian Seward, Peter Sherratt, Thomas Paul Bolland; Respondents: Lehman Brothers Holdings Incorporated, Neuberger Berman Europe Limited
Jurisdiction
England and Wales
Judgment Date
14 October 2011
Procedural Posture
Civil Appeal / Court of Appeal Judgment on Appeal From High Court (chancery Division, Companies Court)
Outcome
Appeals dismissed
Legal Topics
Priority of Liabilities in Insolvency, Financial Support Directions, Contribution Notices, Provable Debts, Expenses in Administration/liquidation, Interpretation of Pensions Act 2004, Interpretation of Insolvency Act 1986
Insolvency Law Pensions Law Company Law Priority of Liabilities in Insolvency Financial Support Directions Contribution Notices Provable Debts Expenses in Administration/liquidation +2 more

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Parties

Alan Robert Bloom, Alan Michael Hudson, Christopher John Wilkinson Hill, Stephen John Harris, David Martin Hughes

Appellants (nortel Administrators)

Anthony Victor Lomas, Steven Anthony Pearson, Michael John Andrew Jervis, Dan Yoram Schwarzmann, Derek Anthony Howell

Appellants (lehman Administrators)

The Pensions Regulator

Respondent

Board of the Pension Protection Fund

Respondent

Nortel Networks UK Pension Trust Ltd

Respondent

Peter Anthony Gamester, Brian Seward, Peter Sherratt, Thomas Paul Bolland

Respondents (lehman Pension Fund Trustees)

Lehman Brothers Holdings Incorporated, Neuberger Berman Europe Limited

Respondents

Procedural Posture

Civil Appeal / Court of Appeal Judgment on Appeal From High Court (chancery Division, Companies Court)

Legal Issues

  1. 1 Whether liabilities under a contribution notice issued pursuant to a financial support direction under the Pensions Act 2004 are provable debts in administration/liquidation or payable as expenses
  2. 2 Whether such liabilities fall into a 'black hole' (i.e., are not payable at all) if not provable or expenses
  3. 3 Interpretation of rule 13.12 of the Insolvency Rules 1986 regarding contingent liabilities

Ratio Decidendi

Liabilities under a contribution notice issued pursuant to a financial support direction under the Pensions Act 2004, where the process is initiated after the company enters administration or liquidation, are not provable debts because no relevant obligation exists before insolvency. However, such liabilities are payable as expenses of the administration or liquidation, as they are statutory liabilities imposed on the company during insolvency and constitute necessary disbursements under the Toshoku principle.

Court Disposition

Appeals dismissed

Orders

  • Subparagraphs (1) and (3) of paragraph 1 of the High Court order stand; liabilities under contribution notices are not provable debts but are payable as expenses in administration or liquidation.