The case, which focuses on the £2.2bn pensions deficit across Lehman and Canadian telecoms specialist Nortel, will ultimately decide whether pension funds should rank above other types of creditors during an administration.
The lawsuit was brought originally by the UK Pensions Regulator towards the end of 2010, when it sought to prove that UK law requires pension funds to rank first, giving them super priority status above banks and unsecured lenders.
In the high court in December 2010 Mr Justice Briggs agreed with the Pensions Regulator but the administrators of Nortel and Lehman Brothers, who would also be affected by the decision, launched an appeal. The cases are now being held together.
Administrators for both collapsed companies will claim that in order to be provable, a liability or claim has to exist as at the date of insolvency and until the regulator exercises a discretion to impose an FSD, there is no liability that exists, in which case it falls down a black hole.
Nick Moser, head of restructuring and corporate recovery at law firm Taylor Wessing, said: "The case is of enormous significance for banks as it has a direct impact on the cost of credit.
"As such, it is hugely significant for the economy as a whole. With bank lending to small businesses continuing to fall year on year, the more difficult corporate Britain finds it to borrow, the more difficult it will be for Britain to trade out of this recession."
The pensions deficit in the Nortel estate is around £2.1bn, while in Lehman it is put at £130m. The appeal could be resolved before the end of this week, when the court of appeal goes into summer recess.
Many legal practitioners believe the case will go all the way to the Supreme Court because the administrators would not leave it unchallenged, if the court of appeal confirms the original ruling in the high court.
The fate of many current administrations also hang on the final decision in the case. The outcome of the £90m pension black hole in Rock, the collapsed builder, will depend on whether the original high court ruling still stands.
Rok’s former and current workers may face huge short falls in their pensions if pension schemes generally rank behind the claims of secured creditors: Rok’s banks are owed around £75m.