Administrators, such as Deloitte, are left with enormous powers and discretion over who gets what when a company enters administration.
A report for the Commons work and pensions select committee found the deficit on the Bernard Matthews pension fund is now likely to be around £20m. But the fund is only due to receive 1p in the pound and has been dubbed “a huge detriment to pensioners”. The report says: “The administration strategy seems to have been carefully crafted to enable secured creditors and controllers of Bernard Matthews to extract maximum cash from the company and dump the pension scheme and other liabilities. No attention has been paid to the hardship caused to retired and existing employees. It is all too easy for companies, their directors and shareholders to extract cash and dump pension obligations to employees, leaving the Pension Protection Fund or taxpayers to foot the bill, and effectively boost returns to corporate elites.”
This is despite sale proceeds of the company being used to make a full payment of £46.4m to lenders Wells Fargo Capital Finance (UK) and PNC Financial Services UK Ltd. Rutland Partners, which was Bernard Matthews’s ultimate owner, has already received £34m.