Element Six put ‘gun’ to pension trustees’ heads

Court hears liquidators would have pursued

Multinational Element Six "put a gun to the heads of its pension fund trustees" in the months before the scheme was wound up in late 2011, the High Court heard yesterday.

Workers from the Shannon-based company whose benefits were cut as a result, are suing the trustees for breach of duty, claiming that they should have demanded that the employer cover its liabilities before winding it up.

In September 2011, its head of finance, Jonathan Aiken, told the trustees in a letter that unless Element Six had absolute certainty regarding the risks facing the scheme, it would stop making a €10.7 million yearly contribution to the plan that it had agreed in 2008.

The company had also warned that if the pension deficit was not tackled, the group would close the Shannon plant. It offered €23 million to cover benefits due to workers as part of its wind-up proposal, which the trustees accepted.

The trustees's chairman, Danny Coady, told the High Court yesterday that they were "very concerned" at this. "A gun was being put to our heads in that the company was saying that if something was not done, it was going to wind up the scheme," he said.


Mr Coady said that he believed that the Irish plant’s multinational parent was willing to put it into liquidation at the time. He pointed out that it had contingency plans in place to facilitate this and had almost closed it in 2009.

He told the court that, as the company had made it clear that winding the scheme up was the only option, and that it was not willing to put more money into it, the trustees' choices were limited.

At the time Mr Coady was finance director of a subsidiary, Element Six Advanced Materials Division, but said he was never involved in compiling group financial statements. He also denied that he had a conflict of interest as a trustee and stressed that he clearly understood his responsibility to the pension fund and beneficiaries.

Mr Coady said he did not believe a threat of closure could have an impact on his career or overall job prospects within the multinational group, particularly as his role was not tied to the Shannon facility.

The witness also said the trustees quizzed Joe Byrne of the scheme's actuary, Willis, and were satisfied that he had no conflict.

The plaintiffs argued last week that a conflict of interest undermined the trustees’ ability to negotiate effectively with the company.

Insolvency expert, Jim Luby of McStay Luby, confirmed that a liquidator would probably have investigated a $68 million return of capital and a $19 million dividend payment, made by the company to its Luxembourg parent in late 2010, if the business had been wound up.

Barry O'Halloran

Barry O'Halloran

Barry O’Halloran covers energy, construction, insolvency, and gaming and betting, among other areas