Two trustees of Element Six's pension scheme told the High Court yesterday that they firmly believed the multinational would have closed its Irish plant in 2011 had it been forced to cover the deficit in its retirement fund.
More than 100 members of the Element Six defined benefit pension scheme are suing its trustees for breach of duty arising from their decision to back a company proposal to wind it up in December 2011, and specifically for failing to demand that Element Six ensure that its liabilities were fully funded.
The company had offered to make a final €23 million contribution on behalf of workers still paying into the fund, along with a €14 million side payment, that included €8 million towards a new plan.
It had warned the trustees that making a contribution demand would force the Shannon-based plant’s liquidation.
Trustees Siobhán Duffy and Dermot Tuite told the High Court yesterday that they believed the multinational's threat that it would wind up the Irish facility.
Ms Duffy, who held a senior role in Shannon at the time, explained that she based her belief on communications from the group to the trustees, including a letter from its head of finance, Jonathan Aiken, in September 2011.
She also said that, based on her direct experience of the group's chief executive, Cyrus Jilla, he would have been very unlikely to back down from the threat to close the plant. "I did not believe that negotiation was an option," she stressed.
Both she and Mr Tuite pointed out that the group had already put contingency plans in place that would have allowed it to close the Irish facility.
Mr Tuite told the court that the group, backed by De Beers and Umicore, had actually announced that it was closing Shannon in 2009.
He was part of a local management committee that drew up a cost-cutting plan that kept it open.
The trustees had commissioned a report from Howarth Bastow Charleton in Limerick indicating that the fund could potentially receive up to €42.5 million if the Irish subsidiary had been placed in liquidation, €18.4 million more than the company's offer, implying that this was a better outcome for the scheme.
However, Ms Duffy pointed out that that report included a number of scenarios, and there were serious risks that making a contribution demand and forcing the company’s liquidation could actually leave the fund worse off than under the terms offered by the group.
There was also no guarantee that it would be treated as a preferential creditor.
