UK/BELGIUM - The Upper Tribunal expressed "serious reservations" about the amount The Pensions Regulator is chasing in its contribution notice against Michel Van De Wiele NV.
In a tribunal held between 25 and 27 October last year, Mr Justice Warren expressed surprise at the £5.089m awarded by the determinations panel in the contribution notice issued against Michel Van De Wiele NV (VDW) - the Belgian parent company of Bonas - last June.
In a judgement handed down on Monday the judge said he had "serious reservations" about whether the regulator had a sustainable case that the amount to be specified in any contribution notice should be anything like the figure of £5.089m - the amount needed to take the scheme up to a position of solvency on the Pension Protection Fund basis.
He added: "It is difficult to see how it could be reasonable to specify a figure larger than the amount of the undervalue. It seems very unlikely indeed that the regulator will be able to sustain an underpayment of more than some tens of thousands of pounds."
In the ruling, the judge dismissed VDW's application to ‘strike out' the regulator's issuance of a contribution notice. However, the regulator was barred from pursuing the issue of a contribution notice to Mr Beauduin - the chairman of VDW and managing director of Bonas - as an individual but can chase the company.
A TPR spokesperson said: "Clearly we welcome Mr Justice Warren's ruling dismissing Van de Wiele's challenges and agreeing that the case should proceed to the tribunal hearing. The regulator does not consider it appropriate, however, to comment further while the case continues."
Pinsent Masons partner and head of pensions litigation Isabel Nurse-Marsh said the judgment revealed the tribunal did not agree with the regulator's approach of basing the amount of the contribution notice on the PPF deficit.
Nurse-Marsh said: "It is interesting to see the Upper Tribunal pushing back on a number of points, in particular as to the quantum of the contribution notice. In many ways it has taken a more stringent view of the legislation than the determinations panel."
In June last year the regulator issued a contribution notice for £5.089m against Michel Van De Wiele N.V. - the Belgian parent company of textile machinery business Bonas. This came after TPR's determinations panel found VDW had retained the Bonas business while avoiding the pension liability, by placing Bonas into a pre-pack insolvency, and had not engaged openly with pension trustees or the regulator.
A full tribunal hearing will follow to consider the case in full including the value of the contribution notice.
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