The Pension Protection Fund (PPF) has issued a guidance note on Insolvency Practitioner remuneration which will apply where the insolvent company has a Defined Benefit Pension Scheme. The guidance note applies to pre and post appointment work.
The Guidance Note can be found here.
Once a scheme enters a PPF assessment period (upon a qualifying insolvency event) the PPF takes over the role of creditor in relation to the scheme. It is therefore important for an office holder to engage with the PPF as a creditor in the insolvency, indeed, often the major creditor.
Where a fee resolution is sought from creditors, the PPF will exercise the scheme’s vote. The PPF therefore need to be engaged in this process in order to ensure that the resolution is valid. Any agreement with the pension scheme trustees will not bind the PPF.
Where there is to be a Section 98 Insolvency Act ’86 meeting, this is will require the proposed liquidator to liaise with the PPF before the meeting. This means engaging with the PPF before the scheme is in an assessment period, before the PPF is a creditor and in anticipation of there being a creditors’ meeting once the company is in liquidation.
In some circumstances – where the scheme’s eligibility for the entry into the PPF is uncertain – it may be appropriate to have a resolution approved by the trustees of the scheme in addition to the PPF.
In the Guidance Note the PPF reminds office holders that they need to:
- Consult with the PPF on the fee basis and quantum at an early stage
- Provide sufficient information to the PPF to enable it to make decisions on fees in a report which complies with SIP 9 and which will require more than just a matrix of hours charged to tasks
- Provide a concise and cogent explanation of how work done (or do be done) provides value to creditors
- Liaise with the PPF regarding any strategy relating to security held by the scheme/trustees
- Engage the PPF early where a pre-pack administration is proposed or risk being removed from office by nomination of alternative liquidators
- Liaise with the PPF if it is likely to be considered appropriate to have a creditors’ committee – in general the PPF will not support this
The PPF are prepared to consider proposals for different charging bases for different work and different charge out rates depending on the complexity of work being undertaken.
The Guidance Note is issued ahead of the the Insolvency (Amendment) Rules 2015 (SI 2015/443) which comes into force in October 2015. The changes to the rules require fee estimates to be given that will act as a cap on fees and will be in addition to the PPF’s requirements summarised above.