Sackers' Regulatory Unit comments on Nortel Networks and Lehman Brothers TPR challenge

The administrators for Nortel Networks and Lehman Brothers have joined forces to seek a Court ruling regarding the Financial Support Direction (FSD) imposed by the Pensions Regulator (TPR). The FSD means that all Nortel and Lehman Brothers companies to whom it is directed must provide financial support for their pension schemes, on the grounds that they were insufficiently resourced.

The administrators claim the FSDs should not entitle the pension schemes to claim in the administration.  In response, TPR and the trustees are arguing that the liability should be treated as an 'expense' in the administration with the effect that they would get a super priority over all other creditors.

Commenting on the case, which started last Wednesday, Peter Murphy, Head of Sackers' Regulatory Unit, said: "The positions taken by both the administrators and the Pensions Regulator seem rather extreme.  The Court may well try to find a more moderate route somehow - although it is not clear whether such a route exists."

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