In related Nortel and Lehman Brothers cases, the Court of Appeal has ruled that financial support directions ("FSDs") and contribution notices ("CNs") issued under the Pensions Act 2004 rank as expenses if they are issued against insolvent targets.

This decision has been eagerly awaited by both the pensions and finance/insolvency communities, as it bears directly on the competing interests of pension scheme members and other creditors in an insolvency context. The Court of Appeal's conclusion offers welcome protection for scheme members, but at the same time means that FSD and CN liabilities will rank in an insolvency ahead of unsecured creditors.