UK - The US bankruptcy court has effectively backed a demand on Sea Containers Ltd by the UK's Pensions Regulator to recognise its financial support responsibilities for two UK pension funds, even though other creditors had argued otherwise.
A court ruling in the US this week stated trustees of the SCL 1983 and 1990 defined benefit pension schemes will be recognised as official creditors of SCL when the company's interests are transferred to a new reorganisation plan.
SCL had initially refused last year to bolster the pension funds which were found to be substantially in deficit so TPR stepped in with its first ever financial support direction (FSD) - essentially forcing SCL to at least recognise the schemes as creditors to its Chapter 11 bankruptcy.
The firm eventually secured a deal with trustees to pay $69m into the funds and withdrew an appeal against the FSD, all of which should have meant the schemes would be recognised within bankruptcy proceedings. (See earlier IPE story: Sea Containers agrees trustee deal)
That hurdle has now been overcome, according to Nick Couldrey, partner at Sacker & Partners - the law firm which advised the large 1983 scheme - though it was not without a fight as other creditors sought to overturn an agreement the US bankruptcy court recognising them as substantial creditors.
"The ruling brings some security to the members of the Scheme in that the trustees are now creditors of SCL and will share in its assets," said Couldrey.
"The FSD has proved its worth as a tool in getting SCL to admit liability for the two scheme deficits and securing the support of the US bankruptcy court for the schemes' claims. I expect it will give TPR confidence to employ financial support directions to protect the interests of members of other pension schemes," he continued.
If you have any comments you would like to add to this or any other story, contact Julie Henderson on + 44 (0)20 7261 4602 or email email@example.com