Synopsis
In the latest of our case studies, we visit one of our first engagements as part of the Pension Protection Fund’s (PPF) pre-insolvency panel.
Background
As part of the PPF panel, we were appointed to a case from the retail sector, involving a pension scheme with over 1,000 members and a substantial funding deficit. As a result, its members were in real threat of having their benefits reduced.
The scheme also had a potentially conflicted trustee board (consisting primarily of current and past employees), alongside shareholders who were understandably intent on protecting value in the business.
With the company incurring significant trading losses, and one of its lenders reducing banking facilities, the company was facing severe pressure from its creditors that could have resulted in imminent insolvency. Timing was absolutely critical to negotiate a mutually acceptable and viable way forward with the numerous key stakeholders involved.
Solutions
As we got to work, innovation was key in the various solutions we proposed – each with the aim of protecting the interests of the scheme members, in addition to maximising mitigation.
After detailed and complex negotiations with the employer and its advisors (under the close scrutiny of TPR and the PPF), a restructuring was eventually agreed and implemented, resulting in the business being able to continue trading, and scheme members retaining their full benefits.
Mitigation was negotiated in the form of an enhanced security package, as well as missed Deficit Reduction Contributions fed back into the scheme. In addition, the employment of over 2,000 staff within the business was also successfully preserved.
An excellent outcome all round, with examples of detailed technical knowledge demonstrated in relation to restructuring and insolvency processes; excellent and sensitive stakeholder management in extremely challenging circumstances with very tight timescales; keeping cool under considerable pressure; and collaborating closely and effectively with all key stakeholders and professional advisers.
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