Case Study

Company Failure Protection

Our client were the trustees of a £5 million pension scheme whose principal employer was a private company. The company was to be sold and there would be a considerable amount of secured debt post-completion.

While the scheme was almost fully funded, there remained a risk that it would require further contributions in the future. As an unsecured creditor, the pension scheme stood to receive less in the event of the company's failure after the sale. In order to protect the pension scheme, an escrow account was established well before the sale which could be called upon in certain circumstances when money was due from the company to the scheme, such as the company’s insolvency or the inability of the company to make contributions to the scheme, to eliminate the deficit. We also advised the trustees in relation to the company's application to The Pensions Regulator for clearance.