PPF guidance on potential legal actions contemplated by insolvency practitioners

Published on 21st Dec 2015

The Pension Protection Fund (“PPF”) has issued guidance on the approach it will take when asked by insolvency practitioners (“IP”) for its views on the merits of, or a defence to, a legal action. This is hot on the heels of other guidance recently published by the PPF directed at IPs on both IP’s fees and pre-packaged administrations (see here).

The new guidance from the PPF can be found here.

The guidance notes that the PPF’s approach will always be driven by its duty to maximise returns to the scheme from insolvent employers. The PPF recognises that litigation can, in certain situations, represent a significant opportunity to enhance the return to creditors. However, to the extent that such actions require sanction by the creditors, the PPF expects to be consulted when it is a significant stakeholder in the outcome of insolvency.

In relation to actions being brought or continued by IPs, the PPF notes that it will not generally provide litigation funding. If an IP intends to fund legal action from assets in the insolvent estate, the PPF will balance the forecast enhancement in the likely dividend against the potential impact of costs. The PPF expects IPs to have considered and be able to explain the following areas before commencing or continuing litigation:

  • Prospects of success – the IP should obtain a legal opinion that assesses the chance of success at 60% or greater.
  • Resources of the targets – the targets should have sufficient resources to pay any award made against them – the PPF is not usually interested in pyrrhic victories.
  • Prudent litigation forecasts – including a worst case costs analysis.
  • Funding of the action – in addition to funding from the estate, the IP should consider the chances of having an adverse costs award, litigation funding and conditional fee arrangements.
  • Expertise of legal advisers – the IP’s legal advisers should have proven expertise in the area being pursued.
  • Alternatives to legal action – for example: informal settlements, mediation and assignments of the claim for valuable consideration.

In relation to actions being defended by IPs, the PPF will expect IPs to explain how the decision to defend or not to defend claims is in the best interest of creditors. The PPF will resist and object to IPs spending creditors’ money defending actions brought against them personally for taking or failing to take actions required of them by law.


If you would like further advice on anything covered in this update, please contact Jonathan Hazlett or James Saddler whose contact details are below. Osborne Clarke is a member of the PPF’s Assessment Period Legal Panel and the Insolvency & Corporate Panel.

Interested in hearing more from Osborne Clarke?

* This article is current as of the date of its publication and does not necessarily reflect the present state of the law or relevant regulation.

Connect with one of our experts

Interested in hearing more from Osborne Clarke?