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ARTICLE · 02 AUGUST 2012

FSDs And Insolvency: New Regulator Statement

CMS Cameron McKenna Nabarro Olswang
Explore more from CMS Cameron McKenna Nabarro Olswang

The Pensions Regulator has today issued a Statement on its power to issue financial support directions ("FSDs") against companies after an insolvency event has occurred.

United KingdomInsolvency/Bankruptcy/Re-Structuring
Mark Grant
Mark Grant

The Pensions Regulator has today issued a Statement on its power to issue financial support directions ("FSDs") against companies after an insolvency event has occurred. The Statement follows longstanding concerns of insolvency practitioners, which have arisen from ongoing court proceedings brought by the Lehman Brothers and Nortel administrators.

Background

If a company is an employer participating in a pension scheme with a deficit and is either a "service company" or "insufficiently resourced", the Regulator can issue an FSD (effectively a guarantee of any amount up to the buy-out deficit in the scheme) to any company participating in the scheme or to companies associated or connected with them. The Regulator must be of the opinion that it is reasonable to issue an FSD against a particular entity.

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