Hammonds and Sacker & Partners are giving legal advice to Sea Containers’ pension funds after the Pensions Regulator took steps towards making the company meet the scheme’s deficits.
The US company and its UK subsidiary Sea Containers Services, which owns GNER, are both currently going through Chapter 11 bankruptcy proceedings in the US. Under that, the management of the company remains in control and is currently in the process of raising assets to meet claims from creditors.
In addition to owing significant amounts of money to bond holders, the company’s two main pension schemes, dated 1983 and 1990, have deficits of £83m and £17.5m respectively. Their combined membership is 1,300.
The Pensions Regulator has ruled that Sea Containers should be subject to a financial support direction (FSD), the first time it has issued such a direction under powers granted in the 2004 Pensions Act. This means the company must put forward proposals on how it will meet the deficits. Although Sea Containers Services was the principle employer in relation to both schemes, the onus falls on the parent company to take responsibility for the deficits.
Simon Price of Hammonds is advising the trustees of the 1990 scheme with Sonnenschein Nath & Rosenthal giving advice on elements relating to Chapter 11 and US law. Nick Couldery of Sackers is advising the 1983 fund with US guidance being provided by Debevoise & Plimpton.
Price and Couldery said: “Two years ago Parliament granted the Pensions Regulator new power to protect the rights of UK pensioners. The trustees of the UK pension schemes are pleased that the Pensions Regulator has determined to exercise that power for the first time in the Sea Containers case and that the Determinations Panel has decided to move forward with the process of a financial support direction to protect Member’s interests.”
Part of the advice related to the trustees filing submissions to the watchdog’s determinations panel, and appearing before it, to support the issuance of an FSD.
Kirkland & Ellis is advising Sea Containers.