This Content Was Last Updated on February 9, 2017 by Jessica Garbett


In this Supreme Court case administrators for both Nortel Networks and Lehman Brothers appealed a 2011 judgement which decided that The Pensions Regulator should be given priority over all other creditors.

The 2011 judgement was that by issuing a Financial Support Directive (FSD) The Pensions Regulator was entitled to take priority over other creditors in claiming money to pay off under-funded pension schemes. At the time of the liquidation the Nortel Networks pension deficit was £130m and the Lehman Brothers pension deficit was £2.1bn.

On 24 July 2013 the Supreme Court ruled that a target company’s liability under the FSD regime, arising pursuant to a FSD issued after the company has gone into administration, ranks as a provable debt of the company, and does not rank as an expense of the administration.

This means that pension schemes do not have priority status in corporate insolvencies. The decision in the 2011 judgement was therefore overturned. View the full summary of this decision.

Article contributed by ACCA