The Pension Protection Fund (PPF) has published its guidance on Company Voluntary Arrangements (CVA).
Recent months have seen a marked increase in the use of CVAs. The majority are aimed exclusively at addressing issues with an employer’s property portfolio with the intension of leaving other creditors, including the defined benefit (DB) pension scheme, untouched. Despite agreeing a CVA with creditors, experience has shown that often the issues facing the businesses remains unaddressed and the employer goes on to fail.
Following a number of recent high profile CVAs where the PPF has exercised creditor rights for the company’s DB pension scheme, the PPF has today published updated guidance which explains the approach employers and their advisors should take when presenting a CVA proposal to the PPF. It highlights the issues that should be considered so that the PPF can decide whether it is appropriate to vote in favour of the proposal or not.
Commenting on the guidance, Malcolm Weir, Director of Restructuring & Insolvency at the PPF said that “our role is to protect the 11 million people who belong to a DB pension scheme and our levy payers, therefore, as with any restructuring case, we do not agree to CVAs lightly. The guidance will help to ensure employers can address the areas of concern for the PPF at the outset and make the process more efficient. As ever we welcome early engagement when proposals are made.”
When an employer (or all employers in the case of a last man standing scheme) lodges a CVA proposal in Court, a PPF Assessment Period will commence for the associated scheme(s). From this moment, the trustees’ rights as a creditor are exercised by the PPF.
The PPF Guidance on Company Voluntary Arrangements can be found here.