Since 1 October 2021, directors, lenders, investors and advisers (including insolvency practitioners in some contexts) face the spectre of criminal prosecution and regulatory sanctions if they take action which is deemed to be materially detrimental to a defined benefit (DB) pension scheme without a reasonable excuse. The offences and sanctions are broadly drafted and despite assurances from the Pensions Regulator it is unclear how and when they will be applied in practice.
In this article published in International Corporate Rescue Journal, Samantha Brown, John Whiteoak, Phillip Lis and Tim Smith from our pensions and RTI teams consider:
- how these new sanctions may impact the approach to restructurings, lending and other corporate activity
- what might constitute a “reasonable excuse”
- how far directors and other stakeholders need to go to identify viable alternatives which might have a less detrimental impact on the scheme, and
- how these sanctions interact with directors’ general legal duties.
This article first appeared in Volume 18, Issue 6 of International Corporate Rescue and is reprinted with the permission of Chase Cambria Publishing.