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Eversheds comment: UK Supreme Court rules that FSDs do not have ‘super-priority’

  • United Kingdom


    The Supreme Court has handed down its judgement in the Nortel-Lehman case today. The Court held that liabilities under a financial support direction (FSD) issued after a company has gone into insolvency would rank as a provable debt (and not as an expense of the administration as the Court of Appeal and the High Court had previously held). Crucially, this means that it ranks alongside other unsecured creditors and behind the expenses of the administration and secured debts in an insolvency situation.

    Commenting on the Supreme Court’s decision, Sarah Swift, Pensions Partner at Eversheds LLP says:

    “The Supreme Court has steered a path through the legislative mess of pensions and insolvency law to find the fairest and most sensible decision for all. This judgment will be welcomed by those working in the insolvency industry as it preserves the ‘rescue culture’ under the UK insolvency regime.”

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