The United States Bankruptcy Court for the District of Delaware has approved a settlement agreement between three Sea Containers companies, their unsecured creditors and the trustees of the two pension schemes belonging to the UK subsidiary Sea Containers Services Limited.
Sea Containers had filed for Chapter 11 bankruptcy protection in 2006. In February 2008 (see EPB bulletin from11 February 2008) the UK Pensions Regulator issued its first financial support directions (FSDs) requiring Sea Containers to provide financial support to its two pension schemes. The Bankruptcy Court:
- held that the issue of the FSDs did not breach the stay of proceedings under the Chapter 11 process as the Pensions Regulator was acting in accordance with statutory functions; and
- upheld the trustees’ analysis of the level of the claims (based on the buyout deficit, plus expenses and an allowance for equalisation claims).
It overruled objections from the other creditors on the basis that:
- the outcome of continued litigation was uncertain and the proposed settlement was “safely within the realm of potential litigation outcomes”;
- further litigation of the trustees’ proofs of claim would be complex, lengthy and expensive promoting further delay, expense and inconvenience in the bankruptcy courts jurisdiction and potentially in foreign jurisdictions; and
- it was unconvinced that the proposal would affect the creditors to an extent that was unfair.