Pension Protection Fund (Moratorium and Arrangements and Reconstructions for Companies in Financial Difficulty) (Amendment and Revocation) Regulations 2020 — House of Lords, 2020-10-21
Topic: Mixed Topics
Deborah Stedman-Scott (Conservative, Centre-right): My Lords, I am pleased to introduce the Pension Protection Fund (Moratorium and Arrangements and Reconstructions for Companies in Financial Difficulty) (Amendment and Revocation) Regulations 2020 that were laid before the House on 15 September. I am satisfied that the provisions in the regulations are compatible with the European Convention on Human Rights and therefore ask the House to consider these regulations The Corporate Insolvency and Governance Act 2020 introduces some important measures, such as a moratorium on creditor action and restructuring tools to give specified corporate entities in financial difficulty the best chance of survival. This is part of a suite of measures to help business weather periods of economic uncertainty. The regulations debated on 14 September ensured that when certain corporate entities obtain a moratorium on creditor action, and the pension scheme trustees or managers are a creditor, the board of the Pension Protection Fund can exercise those creditors’ rights in relation to the moratorium as set out in the regulations, in specified circumstances. The regulations also ensure that when a restructuring is proposed under new measures, in respect of certain corporate entities, and the trustees or managers are a creditor to whom the restructuring is proposed, the board of the Pension Protection Fund can exercise the trustees’ creditors’ rights under the new restructuring measures, that way ensuring that pension schemes are not left without the appropriate protections in the legislation The regulations being debated today simply extend the Pension Protection Fund’s creditors’ rights to certain other corporate entities: relevant co-operative and community benefit schemes in the case of the moratorium, and relevant societies in the case of the restructuring provisions. The regulations also revoke a previous set of regulations because of a legal defect caused by an omission in a related statutory instrument. We have expedited the making and laying of these regulations in order to rectify the situation. The "made affirmative" procedure has enabled these regulations to come into force soon after they were laid These regulations form part of the corporate insolvency and governance legislative regime. If a relevant co-operative and community benefit society obtains a moratorium from its creditors, or a restructuring is proposed in respect of a relevant society as applicable, the Pension Protection Fund is able to intervene as a creditor to protect its interest in the relevant specified circumstances. Moratoriums give companies and other relevant corporate entities respite from action that could otherwise cause them to close. During a moratorium, businesses will be more able to plan a beneficial restructure; this will reduce unnecessary business failures, thereby preserving jobs and value in the economy. Restructuring plans enable companies with viable businesses but significant debts to restructure with limited disruption. This will facilitate corporate rescue and reduce formal, value-destructive insolvencies, thereby preserving businesses and saving jobs Given the importance of the Pension Protection Fund as the statutory compensation scheme, it is crucial for the Pension Protection Fund to have access to and influence over certain decisions relating to moratoriums and recovery plans in the relevant circumstances. Should a rescue attempt fail, it is the Pension Protection Fund that steps in to pay compensation to eligible pension scheme members. Protecting the fund’s interest should help maintain confidence that the Pension Protection Fund will be able to continue to make compensation payments for as long as they are needed I would like to put on record something about the previous PPF regulations that we debated on 14 September: they have no impact, or no effect, on the regulations we are debating today. I am aware that there has been some concern about the legal status of the Pension Protection Fund (Moratorium and Arrangements and Reconstructions for Companies in Financial Difficulty) Regulations 2020, which were debated on 14 September, in so far as they relate to charitable incorporated organisations. The current legal position in respect of charitable incorporated organisations has been complicated by the making of a separate statutory instrument, the Charitable Incorporated Organisations (Insolvency and Dissolution) (Amendment) (No. 2) Regulations 2020, by the Department for Digital, Culture, Media and Sport. Those regulations disapplied some of the new provisions of the Insolvency Act 1986 in relation to charitable incorporated organisations. One of these provisions, Section A51 of the Corporate Insolvency and Governance Act 2020, was used to make my department’s regulations, the Pension Protection Fund (Moratorium and Arrangements and Reconstructions for Companies in Financial Difficulty) Regulations 2020, in so far as they applied to charitable incorporated organisations. As a result, the provisions in my department’s regulations have not applied to charitable incorporated organisations since 13 August 2020, that being the date the Department for Digital, Culture, Media and Sport regulations came into force The legal position, which is clear from reading both sets of regulations together, is that the Department for Digital, Culture, Media and Sport regulations repeal impliedly those aspects of my department’s regulations, in so far as they apply to charitable incorporated organisations. The Department for Digital, Culture, Media and Sport will restore the position as set out in my department’s regulations at the next available opportunity. The Department for Digital, Culture, Media and Sport regulations do not otherwise affect the validity of my department’s regulations, or the powers that we use to make those regulations. I commend these regulations to the House.