High Court decision brings winding-up of £74m Kaupthing pensions scheme within reach

According to legal experts involved in the case, the ruling also sets a significant precedent in allowing for the trading of pension debts where the sponsoring employer has gone bust.

The decision follows an application to the Court by BESTrustees plc on behalf of the members of the pension scheme connected to Kaupthing, Singer & Friedlander – the UK subsidiary of Kaupthing, the now-defunct Icelandic bank.  The Trustee sought the Court's permission to sell the Section 75 debt – the sum allegedly owed by the administrators to the pension fund -  to an unspecified third party should the opportunity arise. 

The Court gave this permission and a sale of the Section 75 debt - which was originally estimated at some £74m -  has now taken place to an undisclosed buyer.

Pensions experts at Pinsent Masons, which acted on the case, believe that the ruling could also ultimately result in pension debts being regularly sold on secondary markets.

Bruce McNess of BESTrustees says:

"We are delighted with this decision, which is a significant step for the members of the pension scheme. Their interests were at the heart of this case and as a result we have been able to conclude a sale on very satisfactory terms.  This enables us to complete the winding-up of the scheme without further delay and to distribute assets to improve the level of pensions being paid to members as soon as possible."

Isabel Nurse-Marsh, a partner and pensions litigation expert at Pinsent Masons, says:

"Above all, this case is a positive development for the scheme members. Anything that helps to mitigate the financial blow of a company administration on those who have paid into its pension pot, and which provides early certainty on what members will ultimately recover, has to be a good thing."

"The impact of this ruling could be felt by others.  This development opens the door for those who specialise in the recovery of distressed securities to create a market for the purchase of debts from other schemes where the employer has gone bust. It's good news for members of pension schemes.  Indeed, this case may be of importance for other statutory debts owed in insolvencies."

The legal team at Pinsent Masons acting for BESTrustees plc on the matter was led by Isabel Nurse-Marsh (partner) and Charlotte Scholes (associate).  Raquel Agnello QC was instructed to act on BESTrustees' behalf.