Insolvency Service
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Supreme Court hands down Administration Expense Ruling

The Supreme Court yesterday delivered judgment in the matter of Lehman Companies (No. 2) following an appeal brought by the administrators. The appeal was allowed, meaning that liabilities under a Financial Support Direction issued against an insolvent company rank as an unsecured claim.

The Supreme Court yesterday handed down judgment in the matter of the Lehman Companies (No 2).

The Government welcomes the decision and careful consideration will be given to the implications of this important judgment.

The judgment relates to where a particular type of liability raised by the Pensions Regulator under pensions law, where a defined benefit pension scheme is in deficit, should sit in the order of priority within an insolvency.

In December 2010, the High Court found that such liabilities should be treated as expenses of the administration procedure, thereby having priority over creditors in the insolvency. In October 2011 that decision was upheld by the Court of Appeal.

Yesterday’s judgment, following an appeal by the administrators, overturns that by ruling that such liabilities are provable unsecured claims. The judgment can accessed via the following link:-

http://www.supremecourt.gov.uk/news/latest-judgments.html


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