Court Ruling May Exempt Plan Sponsor US Subsidiaries From Liability From FSDs
29 June 2012 (PLANSPONSOREurope.com) - Plan sponsors’ US subsidiaries may now be able to consider themselves exempt from liability from financial support directions (FSD) following the US Supreme Court’s refusal to hear Nortel Network’s UK trustees’ case against the defunct company’s US unit.
News site Totaltelecom reports the US Supreme Court this week denied a request to hear a long-running dispute over Nortel Networks Inc.'s UK pension plan and its $3.1bn shortfall, ending the plan's last hope for overturning lower-court rulings.
The plan's trustee had called on the Court to consider holding the defunct telecommunications company's US unit accountable for its UK employees' pensions, arguing that lower US courts have erred in consistently ruling against their stance.
Judith Donnelly, partner at law firm Clyde & Co, told PLANSPONSOR Europe: “Sponsors with US subsidiaries can now probably assume that those subsidiaries are shielded from liability in respect of Financial Support Directions by the pro-debtor US Chapter 11 bankruptcy regime."