UK/US - Sea Containers Ltd (SCL) is to appeal the decision made by the UK Pensions Regulator (TPR) in June to issue Financial Support Directions (FSD) against it.
A statement issued by Bermuda-based SCL, which began Chapter 11 proceedings in the US last year, listed five reasons for its appeal, the first being that the company believed it was “contrary to public policy for the Regulator to give the trustees support which may disadvantage other creditors in a formal restructuring process”.
It continued: “It appears that in recent cases the Regulator has not used its powers, but assisted trustees in their negotiations and given Clearance to restructuring proposals.”
In the first ever use of its full powers, TPR issued the FSD against SCL after ruling it should provide financial support to its London-based subsidiary firm’s two pension schemes, Sea Containers 1983 Pension Scheme and Sea Containers 1990 Pension Scheme.
TPR was widely acclaimed in the UK over the use of its powers, which had lain dormant for the rest of its two-year history, in the SCL case.
Among the reasons subsequently given by TPR’s determination panel for its ground-breaking action were the facts that SCL's London-based subsidiary, SCSL, was wholly-owned by SCL and allowed SCL to benefit from both the lenient Bermudan tax regime and the kudos of having a European headquarters.
The determination panel also alleged a 1989 agreement drawn up between SCL and SCSL had contained “unchallenged evidence” that SCL had intended to stand behind SCSL’s pension liabilities.
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