The Supreme Court handed down its long-awaited judgment today in the Nortel/Lehman case on where a contribution notice (CN) or financial support direction (FSD) issued by the Pensions Regulator (TPR) on a company that is already in insolvency proceedings (eg administration) ranks in the order of priority of payment.
The Supreme Court has held that a CN and liabilities arising as a consequence of complying with an FSD usually rank as a provable debt (at least where the relevant situation relied on by the Regulator pre-dates the start of the insolvency process).
The judgment overturns the decision reached by both the Court of Appeal and Briggs J in the High Court that such a debt ranks as an expense of the insolvency and so ahead of unsecured creditors, creditors with floating charges and various other expenses including, importantly, the insolvency officeholder’s own remuneration.
The Supreme Court ruling will be welcomed by creditors and insolvency practitioners alike, for whom the implications of the lower courts’ arguably surprising decisions were serious and wide-ranging.
To read the Supreme Court press summary click here. For the full judgment click here. We will prepare a fuller briefing analysing the consequences of the judgment which will be available in due course.