Friday, April 14, 2017

A bootiful bounty for some

The influential Commons work and pensions select committee said tThe former owners of Bernard Matthews “lined their own pockets” by rejecting a takeover offer that would have protected the turkey producer’s pension scheme in favour of an insolvency process that ensured a greater return for themselves.

A briefing note prepared for the committee in October by Prem Sikka, professor of accounting at the University of Essex, said: “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.”

The Pension Protection Fund, an industry-backed body that acts as a safety net for the pensions of insolvent companies, is now assessing what money can be recovered from the carcass of the insolvent Bernard Matthews Ltd as part of a process that typically takes years.

 The move by private equity firm Rutland Partners, which sold the company’s assets for £87.5m via a “pre-pack” administration last year, resulted in the 700 members of the scheme facing large cuts to their retirement income. The pension fund is reported to have had a deficit of about £20m when the company collapsed, although that is thought to have grown to as much as £40m. It is estimated that it could cost as much as £75m for the scheme to be bought out and run by a private insurance firm. Currently, the fund is only due to receive 1p in the pound, as part of the pre-pack model arranged by administrators Deloitte. Rutland Partners,  sold the Bernard Matthews assets to the multi-millionaire food tycoon Ranjit Boparan in September. Boparan Private Office wrote to Field last month and said: “BPO made an offer to acquire the whole of the share capital of Bernard Matthews which would have entailed BPO taking on the Bernard Matthews pension scheme and its deficit, but this offer was rejected by Rutland and its advisers.

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