Pension Schemes Bill – criminal offences darken outlook for UK rescue culture

Proposals in the Pension Schemes Bill for new criminal offences could cast a shadow over the UK’s rescue culture and restructuring landscape. Too vague and too broad, they risk deterring a wide range of stakeholders from engaging in turnarounds.

They are intended to address the public concern around the small minority of potential abuses and widely publicised cases dealing with pension issues. But, the powers to impose criminal liability have been drawn incredibly widely. They would require consideration in many typical turnaround situations and would apply beyond simply connected parties to a broader range of stakeholders involved in a restructuring - lenders, investors, trustees, buyers and even their advisors.

As drafted, if a restructuring fails, stakeholders face having to prove or disprove what their intention or knowledge was at the time of the transaction, a prospect which is likely to be unnerving and could deter efforts to undertake financial restructurings for a distressed group with a defined benefit pension.

We cover the proposed criminal offences in our client alert, look at why they raise concerns and what might happen next.