MP asks if firm was 'up to no good'
Pensions fund queries rush for quick Johnston Press sale
Correspondence shared by the chairman of the Work and Pensions Committee Frank Field, the Pension Protection Fund, Pre Pack Pool and the Pension Regulator reveals what Mr Field describes as “worrying details” about the circumstances of the pre-pack deal.
It saw the company immediately acquired by its bondholders and the existing management retain their jobs, leaving the Pension Protection Fund to pick up the bill for its pension scheme, which has a deficit of around £305m on a buyout basis.
The Pension Protection Fund explains that it does not take issue with pre-pack administration in general, but does have concerns in cases where the process is misused to “dump” liabilities, including pension schemes.
In the case of Johnston Press – publisher of The Scotsman, the i newspaper and 200 local titles – it says that it had been led to believe that “the group actually had more than adequate cash reserves”, including reserves needed to pay the pension contribution of £800,000 due on 18 November, just two days after administrators were appointed.
It has asked for evidence of a “burning platform” need for a swift pre-pack deal, and said it has seen none. It does not “understand why there was an apparent rush to complete the pre-pack administration”.
The PPF has referred the case to The Pensions Regulator which has told the Committee that its “enquiries are ongoing” and that it is still considering “whether further investigation of the rationale for the pre-pack may be warranted”.
Mr Field, pictured, said: “It doesn’t take a genius to work out that a company that dumps its pensions liabilities just days before it has to put £800,000 into the pension fund might be up to no good.
“It’s clear that the PPF, which is left to foot the bill, has serious doubts about this pre-pack deal. The Pensions Regulator has promised to be quicker and tougher – now would be a good time to start.”
A spokesman for The Pensions Regulator said: “Where we suspect that the pre-pack process has been misused, to the detriment of the pension scheme, we have strong anti avoidance powers to attain redress on behalf of members where it can be shown that specific legal tests are met.
“We are currently looking closely at the circumstances of the Johnston Press pre-pack deal including timing of the company sale. These enquiries are ongoing and we continue to work closely with the scheme trustee and the PPF.
“Pre-packs can happen at short notice, which is why our powers to act quickly to investigate and take tough action after an event are important, but it also vital that we fully consider the facts of each case. It is not possible to launch an investigation into a pre-pack that has not taken place.
“Regulating the process leading to a pre-pack is a matter for the other agencies. Our role is to focus on a pre-pack’s impact on an employer’s pension scheme.
“We do not have the power to stop a pre-pack taking place (as there is no requirement for either us or the PPF to pre approve it). The Department for Business, Energy and Industrial Strategy (BEIS) is currently looking at pre-packs as part of its wider look at matters of corporate governance.”