A complex regulatory compromise
We were approached by a profitable Company that was struggling under the weight of its pension scheme deficit.
The size of the deficit had risen to some 30 times the annual profit and it was clear that it had become unaffordable.
The key directors had realised that they were extremely unlikely to draw any future value from the business and were minded to walk away. Because they were also the key ‘rainmakers’ that would have resulted in the demise of the business and entry of the Scheme into the PPF.
The existing trustees were inexperienced at such matters and were haemorrhaging funds on advisors without getting anywhere.
2020 Trustees were engaged to try and find a solution.
After a concerted effort on all sides, and some challenges created by a particularly obstructive overseas shareholder, we managed to facilitate a compromise negotiation between a management buy-out team, the other shareholders, the Pensions Regulator and the PPF which resulted in a regulated apportionment arrangement and the transfer of the Scheme to the PPF in return for equity in the Company and a substantial series of payments.
The members have since transferred to the PPF (we transferred the Scheme in just 9 months) and the Company is once again thriving.