Chapter 2 – Information Relating to Employer’s Insolvency etc
Insolvency events
Sections 120: Duty to notify insolvency events in respect of employers
381.This section applies where an insolvency event (see section 121) occurs in relation to the employer in relation to an occupational pension schemes. The insolvency practitioner appointed to act in relation to the employer must notify the Board and the Regulator and the trustees or managers of the pension scheme of the occurrence of the event within a specified period.
382.Subsection (3) defines the “notification period” in which the notification must be provided. This will be the period set out in regulations beginning with the insolvency date (see section 121) or, if later, the date on which the insolvency practitioner becomes aware that a scheme exists in relation to the insolvent employer. Subsection (4) allows regulations under this section to prescribe the form and content of the notice.
Section 121: Insolvency event, insolvency date and insolvency practitioner
383.This section defines an insolvency event and sets out when an insolvency event occurs in relation to an individual, a company and a partnership. These events trigger the involvement of the Board with an occupational pension scheme.
384.Subsection (5) enables regulations to be made prescribing additional events that are to be treated as insolvency events. These regulations may, for example, apply to insolvency proceedings occurring in respect of organisations (such as Banks, building societies and limited liability partnerships) that are not included as insolvency events (as defined).
385.Subsection (7) gives the Secretary of State a regulation making power to make amendments to subsection (4)(e) to deal with insolvent partnerships if the new administration regime introduced by the Enterprise Act 2002 is, in future, applied to partnerships under section 240 of the Insolvency Act 1986.
386.Subsection (8) defines the meaning of ‘insolvency date’ as the date on which the insolvency event occurs.
387.Subsection (9) defines “insolvency practitioner” to include those persons within section 388 of the Insolvency Act 1986 (meaning of “act as an insolvency practitioner”). It also enables regulations to provide that specific individuals may also be regarded as an insolvency practitioner in specific circumstances. This could for example be used in respect of deeds of arrangement or schemes of arrangement under the Companies Act 1985, if these were ever prescribed as an insolvency event. This is because these schemes or deeds may not involve an “insolvency practitioner” within the meaning of section 388 of the Insolvency Act 1986:
deeds of arrangement are very rare and it is unlikely the Board will encounter schemes whose employers are subject to these arrangements.
schemes of arrangements are more common in terms of numbers. These are not dealt with under the Insolvency Act 1986. They are dealt with under the Companies Act 1985 and an “insolvency practitioner” within the meaning of section 388 of that Act is not involved in these cases.
Status of scheme
Section 122: Insolvency practitioner’s duty to issue notices confirming status of scheme
388.This section makes provision for an insolvency practitioner to confirm the status of an occupational pension scheme after the occurrence of an insolvency event in relation to the employer.
389.Subsection (1) provides that the section applies where an insolvency event has occurred in relation to the employer in relation to an occupational pension scheme. Subsection (2) states that, if an insolvency practitioner is able to confirm that a scheme rescue is not possible, he must issue a “scheme failure notice”. If he can confirm that a scheme rescue has occurred, he must issue a “withdrawal notice”.
390.Subsections (3) and (4) provide that the insolvency practitioner must issue a notice where he has not been able to confirm that a scheme rescue has occurred or is not possible. This applies in prescribed circumstances where insolvency proceedings are stayed or come to an end, or where a prescribed event occurs. Subsection (5) provides that a person is able to confirm that a scheme rescue has occurred or is not possible only if he is able to confirm such matters as are prescribed in regulations.
Section 123: Approval of notices issued under section 122
391.This section provides that where a “section 122 notice” (“scheme failure notice” or “withdrawal notice” or notice under section 122(4)) is issued the Board must determine whether or not to approve it. Conditions for approval are provided in the section.
392.Subsection (1) sets out that this section applies where the Board receives a section 122 notice. Subsection (2) states that the Board must determine whether to approve the section 122 notice. Where the conditions in subsection (3) are satisfied the Board must approve the section 122 notice. These conditions are that the Board is satisfied that the insolvency practitioner was required to issue the notice and the notice complied with any requirements set out in regulations made under section 122(8). Subsection (4) provides that when the Board has come to a decision about whether or not to approve the section 122 notice it must inform certain parties (which are listed under this subsection) by issuing a “determination notice”. Subsection (5) provides that the form and content of the determination notice will be prescribed by regulations.
Board’s duties
Section 124: Board’s duty where there is a failure to comply with section 122
393.Subsection (1) states that this section applies where the Board has determined not to approve the section 122 notice or the Board is satisfied that an insolvency practitioner, or former insolvency practitioner, has failed to issue the notice required under section 122. The Board can issue a section 122 notice instead of the insolvency practitioner and the notice will be treated as if it had been given by the insolvency practitioner or former insolvency practitioner.
394.Subsection (4) states that where a notice is issued by the Board, it must give a copy to the Regulator, the trustees or managers of the scheme, the insolvency practitioner (or former insolvency practitioner) who issued or failed to issue the notice in question, any other insolvency practitioner in relation to the employer and, if there is no insolvency practitioner in relation to the employer, the employer.
395.A notice issued by virtue of this section can specify that it has effect from an earlier date than its issue date, if the Board is satisfied it ought to have been issued under section 122 at an earlier date.
Section 125: Binding notices confirming status of scheme
396.This section sets out when a notice under section 122 (confirming a scheme’s status) becomes binding.
397.Subsection (1) states that a notice issued under section 122 is not binding until the Board issues a determination notice under section 123 approving the notice. In addition the notice is not binding until the period within which the issue of the notice may be reviewed has expired, and the review, any reconsideration, any reference to the PPF Ombudsman and any subsequent appeal to the court against his determination has been disposed of and the notice has not been revoked, varied or substituted.
398.If a notice becomes binding the Board must give a notice to that effect together with a copy of the binding notice, to the parties listed in subsection (3).
399.Subsection (4) provides for regulations to prescribe the format of the notice given under subsection (3) and the information it must contain. Where a withdrawal notice under section 122 (2)(b) becomes binding, the subsection (3) notice must also state the time from which the Board ceases to be involved with the scheme (see section 149) (circumstances in which Board ceases to be involved with an eligible scheme).