Ruling boosts Maxwell pensioners: Appeal Court judgment on Paramount Airways brings hope to up to 5,000 former employees of MCC

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The Independent Online
UP TO 5,000 Maxwell pensioners may be able to claim their full pensions, instead of only fractions of what they were owed, following the controversial Paramount Airways ruling.

The Appeal Court's decision promotes the claims of employees to the top of the queue in administrations, as long as they were kept on for at least a fortnight following the appointment of the administrator.

Many thousands of people employed in the late Robert Maxwell's business empire were retained by administrators after the collapse of the group. Some of these employees were subsequently laid off by the administrators Price Waterhouse and Arthur Andersen, while others were kept on.

Legal experts are suggesting that it is these employees who are now eligible to apply for their pensions in full from the administrators, because of the ruling. The number of people affected is between 2,000 and 5,000.

Ken Trench, chairman of the Maxwell Pensioners Action Group, said: 'It appears that things are happening so slowly that any possible answer is a good one.

'These people have not only lost their pensions but have lost their jobs as well.

'As deferred pensioners, they come at the bottom of the pecking order for any monies that may be recovered. Many of them have had problems getting unemployment benefit.'

The trustees of the Maxwell pension funds had aready lodged claims with the administrators before the Paramount ruling, relating to the millions of pounds missing from the funds.

The Law Debenture Trust Corporation, for example, lodged an pounds 83m claim with Price Waterhouse, the administrators of Maxwell Communication Corporation, on behalf of about 5,000 members of the Maxwell Communications Pensions Plan.

Patrick Harrex, a pension trustee with Law Debenture, said the Paramount ruling would not affect this pounds 83m claim, but it may strengthen individual claims brought by pensioners who were laid off by the administrators, or who are still working for MCC.

'It may be that these people will still be entitled to their full pension from MCC,' Mr Harrex said.

Another firm of pension trustees, Clay and Partners, also lodged a claim with Arthur Andersen, the administrators of the private Maxwell companies, before the Paramount ruling. Clay is acting for five Maxwell pension schemes, including the AGB Pension Scheme and Headington Pension Plan.

Roger Fink, a spokesman for Biddle & Co, the solicitors representing Clay & Partners, said: 'The trustees are looking into the implications of the Paramount case and considering what action to take. There is a question here.'

Sources close to the trustees confirm that employees' claims from the administrators may be strengthened by Paramount.

The Maxwell pensioners are just one group that may be affected by the Paramount ruling, the implications of which were only beginning to sink into government and banking circles at the end of last week.

The receivers' national body, the Society of Practitioners of Insolvency, is making a concerted effort to raise the issue with politicians, after attempts to construct a solution collapsed last week.

The SPI was due to issue a declaration today saying that the rescue culture for troubled companies in the UK was dead.

'SPI regards this development as the most serious threat to business rescue in the experience of its members and intends to make urgent representations to the Government, and to consult widely with representatives of the banking community to decide what further action to take.'

The SPI's president, Mark Homan, said: 'This decision may force administrators and receivers to sack all employees and to close down businesses if a sale cannot be achieved within a fortnight of their appointment.'

Steve Hill, an insolvency partner with Coopers & Lybrand, summed up the feelings of the insolvency profession by saying: 'The Appeal Court has pulled the pin out of a grenade (with the Paramount ruling) but it hasn't gone off yet. Everyone is now wondering who will be hit.'