Vol 18 (2021) - Issue 4

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Virgin Territory: What are the Implications of Restructuring Plans for Defined Benefit Pension Schemes?

Synopsis
The judgment in Re Virgin Active Holdings Limited [2021] EWHC 1246 has empowered the use of restructuring plans under Part 26A to the Companies Act 2006 ('RPs') to compromise the rights of unsecured creditors based on evidence that they would receive little or no return on an insolvency – i.e. that they are 'out of the money'.
This is potentially significant for defined benefit pension schemes ('DB Schemes'). Whilst RPs may weaken the whip hand of DB Scheme trustees and the Pension Protection Fund in restructurings, there remain significant hurdles and potential risks to companies seeking to compromise pension liabilities without trustee consent.