Protecting the scheme in a corporate take-over situation

Elizabeth Gane: First of all, welcome everybody, a very warm welcome to this, the first session in our Volume 2 of our scheme sessions. Today's session is on protecting the trustee in a corporate take-over situation. And I am delighted to be joined today by both Richard Hawkins who is a Trustee Director of the G4S Pension Scheme and Maddy Frost who is a Legal Director in our team at Gowling.

I am going to hand over to Maddy and Richard to introduce themselves properly and fully in a moment but before I do, just a couple of housekeeping points.

So first of all we are expecting today's session to last for around 40 minutes of talking and that should leave us 15 or 20 minutes for questions. If you do want to raise any questions, please can I ask you to type your question into the Q&A function which is on the toolbar at the bottom of your screen and I will ask Richard and Maddy to pick up as many of those questions as they can at the end. If we happen to run out of time, if we cannot answer all of the questions, or if you think of something after the webinar has ended, we will circulate our contact details after this session so that you can contact us separately with anything that you wanted to raise.

Just to mention that the session is being recorded. We will send out the link afterwards to all attendees and the webinar will be available on demand on our website. If you are not speaking, please can I ask you to go on mute and cameras will be off for the duration of the session with the exception of the speakers who, if technology allows, will remain on camera. So that is it from me. I would like to hand over now to Maddy and Richard. Thank you.

Maddy Frost: Thanks Liz. Good afternoon everyone, thank you for joining us. I am Maddy Frost as Liz said, a Legal Director in the pensions team here at Gowling. I primarily act for trustees, managing schemes of all sizes from advising on the more day to day legal queries to bigger projects such as the one we are going to be talking about today. So as Liz said, in today's session we are going to be talking about how to protect the trustee in the context of a take-over of its sponsoring employer. I am absolutely delighted to be joined by Richard for today's session who has some really valuable hands on experience as a pension scheme trustee. Richard, I will let you introduce yourself.

[Richard on mute]

Richard Hawkins: Never trust me with technology - there you go. I am a Trustee Director appointed by Group G4S in 2009 and took over as Deputy Chairman in 2014. I am an FCA who qualified way back in 1973 and worked in the profession in Belgium and Norway before seeing the light and moving into industry as we used to call it. And I worked in Africa for quite a while returning to the UK eventually and, since returning, I pursued a 25 year career in G4S during which I held a number of senior positions in finance and executive management prior to retiring myself in 2010 as Group Security and Risk Director.

As well as being a Trustee Director I also chair the audit committee and serve on the investment sub-committee. Incidentally I am a member of the pension scheme myself which means I have a very keen interest in preserving the benefits of my fellow pensioners. So I will now hand over to Maddy who is going to take you through the agenda.

Maddy: Yes, just a quick look at what we are going to talk about today. So we are talking about the situation where the corporate is a listed company and a sponsor of a large defined benefit pension scheme and another entity then seeks to acquire that sponsor. Many of the points we will be talking about today would apply equally actually to non-listed companies but in this case we have the extra excitement of the take-over code which I will mention a bit later on.

So as I said we are considering the take-over sponsoring employer from the trustees' perspective. We are not considering a sponsor in distress - that will be the topic of the next scheme session's webinar next week. We will be looking at the context of a sponsor that is pretty healthy, meeting its financial obligations including to the pension scheme with no suggestion that will change.

Now of course with Richard's presence you will know that this session is loosely based around a real case. However, we are bringing together combined experience on various transactions so, no confidential information will be given and our discussion today should not be assumed to relate only to one particular case particularly the information we give about trustee powers and the regulator's involvement. To ensure that we protect confidentiality of all parties, we have deliberately masked some information but without changing the substance of the points that we want to make.

So that said, in terms of the agenda, I will talk about the initial legal considerations when the trustee first hears that a company is expressing an interest in its sponsor. Richard will then talk about some practical considerations and the trustee's role throughout the process and I will then talk a little bit about the trustees' interaction with both the pensions regulator and the take-over panel and then we will both share with you some final thoughts.

So, just to give you a bit more background (on the next slide please Rosie) to what we are talking about today. We are considering the take-over of a company which was the sponsor as I said of a large DB pension scheme. Rather unimaginatively I expect I will refer to the company as the "Target" or I might slip into referring to it as the "Sponsor".

So a bidder, let us call that "Bidder 1", stated its intention to acquire control of the Target. It was a hostile bid so it was not supported by the Target company who considered that it undervalued it. Shortly afterwards the Target received an expression of interest from another bidder, we will call that "Bidder 2", regarding a possible offer of the shares of the Target company. Now if either bid was successful there would be a resultant change in the covenant that was supporting the scheme and there would be increased debt. So ultimately, the bidder from Bidder 2 became a recommended and successful bid. Before that though, there was a period of uncertainty where both bidders were making offers for the Target company in what was I think it is fair to say, at least in part, a pretty acrimonious process with accusations being made particularly by Bidder 1 in the press regarding the Target's running of its own company and its funding of the pension scheme. And it did not stop there, it also accused Bidder 2 of not being a serious buyer. And I can say all that because it was all widely reported in the press.

But this meant for the trustee that there was this period during which the trustee was having to have discussions with the two bidders. Nobody knew which, if either actually, of the bidders would be successful. So the trustee therefore had to get itself to a place where it had negotiated a package with both bidders. Now of course this in itself had challenges for example to what extent should the trustee compare or prefer one bidder or package to another and we will talk about that a bit more as the sessions goes on. But also of course the trustee had to be very mindful of its ongoing relationship with the Target company as its current sponsor.

The trustee was involved in the process from the start, not least because it had some special powers which I will come on to in a moment. Unsurprisingly TPR was very interested in the transaction. I'll also look at how the strict timetables on The City Code on Takeovers and Mergers impacted the trustee's consideration of the transaction.

I am just going to pass over to Richard now, who is going to give some comments on how this all felt from a trustee perspective.

Richard Hawkins: Yes, it did feel quite peculiar really, because all this happened during lockdown, most of it happened during lockdown, so everything was on Zoom calls et cetera. But in terms of timing, the initial corporate interest of the first bidder and then the second bidder. Particularly on the first bidder, it did come as a particular surprise to the trustee. However, happily, we had some solid governance procedures in place which meant it could adapt quickly to the demands that were placed on it. I will talk in a moment about some of these processes were and how it is possible for a trustee to be prepared and to expect the unexpected because, rest assured, there was an awful lot of unexpected arising. However, having good procedures in place and a good communication between your trustees, directors, advisers and the sponsor gave us a confidence and tools at the outset to enable us to negotiate with the bidders and keep TPR and the takeover panel informed and basically happy.

So now I am going to handover to Maddy.

Maddy: Thanks Richard. So let's flick to the next slide please, Rosie, and the following one please, and we will have a look at some of the initial considerations. So I am obviously going to talk about the initial legal considerations and, actually, to be honest, they were probably the key considerations throughout the whole process.

So let's talk about that trustee power. A really key part of this scenario was that the trustee had an important power in the scheme rules. As I said, I am not going to describe to you what the exact power the G4S trustees had, but let's say for the purpose of today's session that, on the takeover of a sponsor, the trustee had a power that meant if the trustee decided that a takeover event had occurred, it meant that that gave the trustee a unilateral contribution power. So clearly control of the contribution rate is a quite important power and one that the bidders were very keen to ensure that the trustee did not use. The trustee decided that a takeover event had occurred in relation to Bidder 1 and that that takeover event continued in respect of the bid from Bidder 2. Both bidders approached the trustees with proposals as to how they would fund and support the scheme, so this meant the trustee had to work to understand the impact on the covenant if either of the bidders were successful and to assess each of their proposals in that context. Unsurprisingly, a condition of the packages offered by both bidders was that the trustee must agree to waive its power on a takeover that it was given under the rules and this is clearly a very important and tricky decision for the trustee to make but it did certainly give the trustee leverage in the negotiation of the packages with the bidders.

Now, I need to be clear. It is not the trustee's role or, of course, within its power to control the outcome of the bid; that was a matter for the shareholders. The trustee just needed to ensure that the scheme was in a good place regardless of the outcome. And, actually, in each case, with each bidder, the decision the trustee made was that if the transaction proceeded with either of them, was that the trustee would be in a better position with the package offered which includes the waiver of its takeover event powers than it would be to not agree to a package, retain its takeover event powers and then attempt to renegotiate in the event that a transaction eventually proceeded on the basis it did. So with each bidder the trustee entered into a terms of agreement that documented the package that it considered would be favourable to the scheme and with the successful bidder, of course, this was then turned into a formal, legally binding pensions agreement which sets out the agreed terms – so things you would see in those kinds of agreements would generally be funding provisions, any upside sharing, downside protection, covenant monitoring and any protections agreed in respect of covenant leakage.

That is not to say that the trustee would have accepted any package. If it could not have reached an appropriate mitigation package with either bidder, it was prepared to proceed with the process, keeping hold of its takeover event powers and seeing what would happen as the next step.

And, of course, not all pension schemes are going to have a power that is triggered on or leading up to a takeover, but the trustees will be expected to bring any tools available to them to the table, whether that is in bringing forward a valuation or looking at other powers in the rules such as investment of the assets, which leads us on to TPR expectations.

TPR expects trustees to exert an influence. They must have a seat at the table. In this case, as I said, both bidders engaged with the trustees at an early stage and presented proposals to them. If this does not happen trustees should actively seek engagement to understand the implications on the covenants supporting the scheme and also the bidders' plans to fund the scheme. TPR expects this and, of course, trustees would want to champion the interests of the scheme beneficiaries.

The third initial consideration, and a key consideration throughout, was conflicts of interest. The trustee had an established conflicts of interest policy that was put to use at the absolute get-go. This meant that one of the trustee directors did not take part in any discussions relating to the transaction at all and later on in the process, a further trustee director was excused from certain meetings, of course, largely due to the director's role as an employee of the target company and the information that they would be seeing in that role, particularly in the context of the hostile bid, where the target was mounting a defence document against that bid, so any information that the trustee director would see in that context, of course, could not be brought to the trustee board. But the quick implementation of the conflicts policy meant that there was no scope for the trustee decision making to be challenged on the grounds of conflict of interest. This is absolutely key factor for the pensions regulator and was actually really helpful that the trustee could demonstrate that this had been considered at a very early stage.

So, Richard, I am going to pass over to you now to talk about some initial practical considerations.

Richard: Yes. Next slide please. Yes, so, it was difficult to be fully prepared, having been through this transaction, but there were some things that we already had which were quite useful. We had a documented crisis management procedure which included a tried and tested communications system so the trustee directors could be communicating, even during lockdown, together. We had a chairman – and still do. I hope he is not listening – who was a highly experienced professional trustee. So that helps. And we had a team of advisers who knew the scheme because they had worked with us for a number of years, all the advisers had worked with us for a number of years. And, of course, we had a very good relationship with the sponsor, who at that time was G4S. So there were processes in place to mobilise the trustee directors because obviously the PLC could not tell us anything until there was a proper expression of interest, so they told us and we had to get things sorted out pretty quickly, and with a WhatsApp group we had, that was a problem that was pretty easy to solve.

We had regular trustee meetings. Tended to be eight o'clock in the morning and often the same day when things had moved on, even in the evening we used to have meetings. So there is a big commitment by all the trustee directors when these transactions arise. Bearing in mind, of course, we had two bidders so we had to repeat the process. We were absolutely convinced that we should keep minutes because we knew we had to speak to TPR so our scheme secretary took minutes of all the meetings which were circulated during the day and all that type of thing, and this audit trail was really important. Our legal, actuarial and covenant advisers, as I said, knew the scheme well and worked together so it when it started, everybody knew everybody else and we all had a good idea which way we were heading.

On top of that, the trustee appointed an independent communications PR company to deal with the press, advise us how to deal with the press, bearing in mind what Maddy said before, that one was kind of a hostile bid and was running to the press all the time. On top of that, they also advised us on communicating with our members, which we will talk about a bit later too, how we communicated with them. Clearly, the communications people, they were involved in our daily meetings too.

As we said, the legal advice we had, which Maddy has been through, about clarifying the powers et cetera, and the conflicts of interest which we were quite keen to ensure that what we had was fit for purpose and legal advice was taken at the outset on other important areas. Covenant advice was also taken. Again, covenant advisers attended all the meetings considering the impact of any transactions on the covenant, so the two lots of transactions were going to be on the table and we had to decide on that. Of course, our scheme actuary was able to comment on the funding implications and the adequacy of the funding package offered by the bidders and all of which were vital to the final negotiations that we had.

So having gathered the advisers, we then started to look at our communications which I think is the most important thing all round, is these transactions. So we talked about the communications with the trustee directors of how we could keep in contact, how we could make decisions and the other people we had to serve were the most important people of all, our members. We sent letters to them – we have, I think, 24,000 people, members, at various stages, so we had to send them letters, supplemented by FAQs et cetera and towards the end of the process we actually put a separate, independent website up for questions if they had any. To be frank, the letters were sent out just to explain to everybody that we still have the reins in this transaction that we still had their interests, they were still going to have their pensions paid now and in the future, so it was really to beef up the view, which we did. I think worked out quite well in the end.

Press interest. Well, as you heard, there was quite a lot of press interest and we managed to deal with it over the period of time and our PR advisers were quite experienced in this area of pensions. Obviously aware of the takeover code and what you could say, what you could not say. Generally, in terms, most of it was 'no comment' but we needed that backup from the PR company.

So I am going to move on to the next slide I think, yes please. So trustee's role throughout. Well it can be summarised. Members' interests are at the forefront, are paramount. That is what we are there for. We are not there for judging a bid. Obviously we want to get the best deal possible which would involve some judgements and we wanted to ensure that our people had security of benefits, and we had to explain to our members that we are not in control of the outcome because, obviously, they did not know that really and, with that, we actually sent letters out after each bid was received so they knew. Obviously we are controlled by takeover code, there is not much we could say but, again, it was emphasising, "look, your benefits are secure. We will make sure we secure your benefits", and we were aiming to keep their benefits at a level in excess of what they have got at the moment. In other words, with covenants and things like that supporting them.

I think that is really all I have to say on that at the moment. Can we move to slide 8 please? With Maddy.

Maddy: Yes, thanks Richard, this is me again. So preparing for the regulator's scrutiny. Now I mentioned that TPR was involved very early on in the context of Bidder 1, remained involved throughout the negotiation with Bidder 2. TPR actually put quite a lot of pressure on the trustee to negotiate a favourable package for the scheme, no less than you would expect I suppose, although our experience was that potentially more pressure was put on the trustee than the bidders themselves and the trustee chairman had to keep TPR appraised of developments and respond to their queries promptly. It was really important to TPR that the trustee was aware of and prepared to use the powers available to it. TPR is clear that trustees should be proactive and should be robust. It was also important that the trustee really understood the terms proposed by each bidder and the impact that that would have on the scheme. TPR expected the trustee to have the support of its advisers but also that the trustee had an understanding of the existing covenants supporting the scheme and what covenant would be available if either bidder was successful. The use of TPR powers was not a direct issue but in transactions like the one we are talking about today, the awareness of TPR powers is always a backdrop to the negotiation with the bidders, and the bidders are usually very aware of the potential for a TPR investigation and that if TPR considers that arrangements have not been put in place to adequately mitigate any potential material detriment caused by the transaction, it will consider the merits of investigating so the desire to satisfy TPR that appropriate arrangements were being put in place was a key issue in the transaction, and something that the bidders took very seriously. And as I mentioned earlier on actually, as well, the management of conflicts of interest was an absolute key factor for TPR.

Richard I do not know if you want to say a few words about your view of TPR.

Richard: Well, not for publication really. No, we have dealt with TPR over a number of issues over the past, well since they have been involved really, and we were aware that they had to be involved in the transaction that was going to take place, even if transaction did not take place. Yes, we communicated with them quite regularly, it could be two or three times a week sometimes because they are really anxious that they should have a say but they did not want to be involved in the negotiations effectively, and they wanted us to do the negotiations which it was in the end. All discussions with TPR were minuted and letters were exchanged so that we had what was their position and what was our position, and we had specific meetings, again because it was lockdown, through Zoom, with TPR and kept them up to date throughout. The fact is both TPR and trustee interests were aligned in securing the benefits for our members, we just approached it from a different way. I have to say TPR was very demanding of the trustee. At times this felt difficult as they appear to drive the assessment process without being hands on in the negotiations. However, all in all, I think in the end they were a helpful ally, certainly useful ally in our corner. There is a question mark on there but I think they were, but it did complicate things quite a lot but we have to deal with TPR anyhow.

So we will pass on to the next slide please. That's Maddy.

Maddy: Yes, thanks Richard. So I have mentioned it a couple of times the takeover code and it was particularly interested in the context of a hostile bid but it actually also proved quite important in the way that the Trustee communicated with both bidders and also with its membership so I am sure you are aware, the City code on takeovers and mergers is a statutory framework for takeovers aiming to ensure that shareholders are treated fairly. It includes provisions to encourage that early dialogue between the trustees, the targets and the bidder. It also mandates some strict timetables so this is intended to balance that need for the target shareholders to have time to consider the bid whilst also preventing the target company from having this bid having over its head indefinitely. So for the trustee, the code was firstly relevant in what the bidders told the trustee and what the trustee then told the bidders so the bidders actually approached the trustee each of them when their offers were publicly announced so at a time which it was easier to discuss matters with the trustee and the code does actually require the bidders to include statements of their intentions in relation to the pension scheme in their offer document and it does not have to be a very detailed statement that actually it was not in this case, it was just a statement that the bidder intended to address the underfunding and to ensure that the interests of their members were safeguarded although the takeover panel does take such statements seriously and expects them to be adhered to. More information about how the bidders propose to achieve this objective was communicated to the trustee in the forms of the mitigation packages that were put before the trustee although this was of course not publicly available information.

Now secondly, the take-over code meant that the information flow from the trustee to the bidders had to be equal so what information that the trustee was asked and provided to bidder 1 equally provided to bidder 2. This is actually reflective of the approach that the trustee took in the negotiation with the bidders to have an agreed package with both not to take sides but to just really focus in on whatever the outcome, what is the best position we can be in for our membership. Actually linked to this also was the trustee's decision whether or not to put an opinion in the sponsor's defence document in respect of the hostile bid, the trustee did not, it is quite unusual I think but not heard of for trustees to include an opinion but this just was not in the trustee's focus at that point to comment one way or the other and although it was not a sole factor in the trustee's decision not to put a comment in, it was mindful throughout the process of maintaining that good relationship with the target company. Of course that is the covenant on which it relied and for it new, both bids could fail and it would be back in the position it was with its current sponsor, and finally the code was also relevant to member communications and the chair of trustees actually approached and met with the takeover panel presenting to the panel the proposed communication to members just to ensure that it did stay on the right line of what the takeover panel would be happy with to be communicated on the basis you communicate with your members that information then becomes public.

OK so we are on to some key takeaways. Thank you Rosie.

So just to bring some of these themes that we have been talking about together be prepared. Richard has talked about how it can be difficult to be fully prepared for a situation like this for trustees and advisors, but there are certain things I think that you can do to be in the best position you possibly can if faced with a takeover situation. First thing be aware of you powers knowing what leverage you would have is really important. So although the trustee at the start of this process took legal advice, clarifying the parameters of its powers in the rules. It of course already knew that it had the takeover event powers and we would recommend that all trustees remind themselves of the scope of their powers if they were ever faced with this corporate activity and it may to be honest just be a matter of understanding the limitations on the trustee powers knowing what you have got in your armour and what you have not. In my experiences that does not necessarily mean the reduction of an expectation to negotiate the best package you can whether you have some strong powers or may be not such strong powers but part of this being prepared is having good governance. This will be expected of course of all trustees and it will be tamped up when we get the single code. Richard said the transaction took up a significant amount of trustee time and at times was very fast paced so having good governance procedures in place to be able to call a meeting to have the meeting minuted to ensure requests were put in writing. That was really important also to have that fit for purpose conflicts of interest policy that you can demonstrate was implemented right at the outset was so key to the transaction and a final take-away from me post event is not over when the documents are signed. The trustee should be live to any ongoing monitoring that may be needed to ensure that the new owner complies with the provisions of the pensions agreement that you spent the past few months fighting hard over so I think if a takeover is then successful the new owner will go through a period of transition and it might be actually at that point adhering to the pensions agreement might just not be in the forefront of minds so the trustee should make sure that it is in a position to know what it is expecting from its new sponsor and to ensure that it gets those things that it is expecting.

Richard, I do not know if you have any final thoughts you would like to share.

Richard: Yes next slide please.

Yes be prepared to negotiate as trustee directors, get the best deal possible which will mean you get the best deal possible for your members and negotiations effectively I would say took about three to four months from flash to bang so it was as it was said quite a huge use of time but if you do not negotiate you do not get the best deal. It is never too early preparatory work which would include stuff like assessing, finding out the trustee's powers are actually if a takeover is ever likely and what strategy you would wish to follow and I think that is quite important. Make sure all trustee requests are documented in writing to determine what it wants and we did all that and you need an audit trail but you also need to be able to go before TDR and say well we told you that it's in that letter so be ever mindful of relationship with the sponsor alright during this process because we had two bids on the table and maybe neither of them have got it. Maybe none of them would have been able to get it so we would still have to deal with the sponsor and also the relationship with the members at the end of every meeting we are only here we used to say, we are only here for the members and that is all the things that is our total goal, and Maddy eluded to it a little bit but we had to monitor the implementation of the pension agreement after the transaction was completed and over a period of time, over some things are agreed in the pension agreement and really thank God we did because we had to point out one or two things that weren't exactly going the right way which have all been altered, all misunderstandings obviously but a vital thing that we should be doing. The pension agreement basically encapsulates what we want and this is what we have agreed so we want the new company to follow that agreement.

That is really my takeaways anyhow on that. So.

Elizabeth: thank you very much for Richard and Maddy. We do have a little bit of time for questions. You have got about 15 – 20 minutes something like that so just as a reminder, if you have got anything that you wanted to raise or any comments that you wanted to mention, please just type that into the Q&A function on the toolbar on your screen and while we are sort of waiting for people to do that, I suppose I had a question and it is probably for you Richard and that is just around the members on how they reacted to it so you are obviously very keen on keeping members in the loop as well as far as possible and the communications that went out to the members but you obviously had to be very careful as well what you were able to say to members and I can think of schemes that I am involved in where if something like this happens, there would be a million questions from members, members would be getting in touch with the trustees on the board that they knew, there would probably be quite a lot of concern. I'm just interested to know whether that happens in your situation and if so, how would you kind of manage those requests.

Richard: Yeah so yes we did have that. I personally got quite a few telephone calls, what's happening etc. but for ever conscious of the fact that you are governed by the takeover code what you could give to the members as well as anybody else so we reported any contacts we had with our members so that that was reported within the meeting structure and I know that the employee elected members got even more questions from the members. Strangely because we issued FAQs on the two major letters we sent out there weren't a huge amount of reaction to the FAQs but certainly on the personal side so any trustee director who had got a question would report that question and if you could not answer it you say you cannot answer it, it is the easier thing to do because we are governed by the takeover code.

Elizabeth: We always have to have a script don't you to make sure everybody's saying the same thing…

Richard: Well we did have a script but that script was the first thing that you throw out actually because no-one ever got the right question. That's the problem.

Elizabeth: OK thanks Richard. Thanks Richard that's interesting to hear just on a practical perspective. Another thing that sort of struck me was that although you had your conflict of interest policy there were clearly two trustee directors who either took no part in the discussions or who were only able to take part in some of the discussions that you were having and I wondered whether TPR reacted to that all. Do TPR ever make a suggestion that there needed to be an independent on the board or I don't know if it was another independent who wanted to have a professional trustee on the board already Richard?

Richard: Yes.

Elizabeth: did you get any of that push back from TPR?

Richard: We had push back on conflicts of interest and in fact because they did not believe what we said to them in the first place and we sent them an accurate [unclear 00:49:36] and we had a number of conversations with them saying we believe that we have dealt satisfactorily with a conflict of interest. I don't think they ever suggest that we have an independent person on the board. It was the chairman who the processional independent director so we had employee nominated members and we have company members, company nominated. I for instance was a company nominated back in 2009 and I so I think everybody had, we were quite satisfied. In fact, of course we did refer to Gowling to make sure and we had an opinion which said yes that's OK, and they were the things, they also suggested that the when there are certain discussions going off that. We have explained that.

Maddy: He actually took some time to talk to a number of the trustee directors individually about their positions. It can be a very tricky area for trustees to navigate so and I think in some of the cases, there was probably an abundance of caution in our approach, we definitely did not want any suggestion that there was any conflict of information and quite frankly you do not want to put people in that position with what they might be seeing in their day job is relevant to their trustee role so it is something that we took very seriously from the outset, the trustees took very seriously from the outset and absolutely was helpful throughout the whole process to be honest and I think it was just lucky actually that there is a good solid strong trustee board with a number of directors that all wanted to be involved in the discussions going forward despite the regular 8.00am starts so there was still plenty of opinions to be voiced on the trustee board despite managing those conflicts effectively.

Elizabeth: Did you have any trustee directors who struggled with the volume of work that was involved. I mean about some trustee boards that I am involved with. People have very, very busy day jobs so I was wondering whether there was a need to set up sub-committees for example to make decisions quickly in some situations.

Richard: Shall I answer that Maddy? Yeah. Well we did kind of have a sub-committee that dealt with the PR right and of course I am retired and the chairman has got other things he has got to do but generally the people who had full time jobs, and it was probably fortuitous that it was during lockdown too actually because a lot of the work was during lockdown where people can work from home and had a few more hours to so things as they say so we did not really have a problem it that and if anybody could not make it, they were excused but they got the minutes and the minutes were fairly detailed.

Elizabeth: OK. As I have got one final question before I wrap up I mean Maddy maybe this is one for you but it sounds to me as though there was some very strong trustee powers in this particular scheme and it sounds like it is quite an unusual power so I was thinking about the schemes that I advise I can't think of any that have power. Do you think the deal that you are able to strike was only possible because you had that strong power to start with?

Maddy: I think that strong power got the bidders engaged with the trustee nice and early. There was a suggestion by the bidder's lawyer that potentially that the power was not the power that the trustee believed it was and that it was not appropriate to use in the circumstances but nobody wanted to send any time and effort fighting over that when I think there was an acceptance that regardless of that power or not, there was TPR involved. The trustee had its duties to secure members' benefits. It was widely publicised in the press so although I think it was a helpful tool for the trustee to have I would suggest that it would have got to a very similar package regardless.

Elizabeth: OK. Interesting. Thanks for that and yes interesting thoughts.

Maddy: I would not want to put trustees off fighting their corer if they do not have one of these powers hidden in their rules somewhere.

Elizabeth: Thanks ever so much Richard and Maddy for an excellent session and actually a real practical insight into how these sorts of situations can pan out. Thanks very much. I think for me there is probably three key takeaways. One is like a good boy scout, always be prepared and it sounds as though you can have things in place right from the start even if you have got nothing on the horizon at the moment. Actually you have policies and things in place that were really useful to have there when this situation started. Number 2, the trustee is obviously applying a key role in the negotiation with the perspective new employers to protect the scheme and the number, and number 3 is obviously as with everything, maintaining that positive relationship with the employer and with the perspective new employers is absolutely key to making sure that you have got the best outcome for members. As I say, thank you every so much. Thanks ever so much for taking the time and particular thanks to Richard for joining us. As a reminder, two things so first of all if you have got any further questions that you think of after the session, please get in touch with one of us. Our contact details will be circulated. Afterwards and second, just a plug for our scheme session which is happening next week and Jason Coates will be chairing a session on dealing with a distressed employer again taken from a real life situation that we advised on very, very recently. Thanks very much everybody for joining us and we will hopefully see you soon.