Brintons scheme enters PPF assessment after pre-pack insolvency

The Brintons Limited Staff Pension and Life Assurance Plan has entered Pension Protection Fund assessment after private equity firm Carlyle triggered its sponsor’s insolvency then bought the business.

Carlyle placed Brintons into administration on 2 September - a week after acquiring its senior debt - and bought its business and assets through a newly-created vehicle Brintons Carpets on the same day.

Brintons financial director Peter Johansen - who will remain in the role at the new company - said: "It's a great transaction because all the jobs are preserved, all the creditors are being paid, and the company's moving forward and it's got new money to invest in the future."

Brintons Carpets will invest about £20m in the business and take on the same amount in debt, with the capital coming from Carlyle's distressed assets arm Carlyle Strategic Partners.

But Johansen confirmed that, as a contingent creditor, the 1,500-member scheme - which had a deficit of about £10.5m on an FRS17 basis - would receive nothing.

A statement from law firm Nabarro on behalf of the trustees said they had been kept fully informed during the restructuring and had communicated to members the role of the PPF and impact on their benefits.

The scheme closed to new members in 2003 and to future accrual in 2006, since when Johansen said the employer had been contributing approximately £1m a year to recover the deficit.

He said the company had been in contact with The Pensions Regulator throughout but had not applied for clearance for the transaction as this was not possible when dealing with an insolvent company.

But the deal could raise fresh concerns over ‘pre-pack' sales where a transaction is negotiated in advance of an insolvency and then concluded shortly after an administrator is appointed (PP Online, 23 January, 2009).

The Pensions Regulator is currently investigating the circumstances in which Silentnight shed its pension obligations during insolvency before being acquired by private equity group HIG (PP Online, 19 May).