House of Fraser pension members could suffer a substantial cut to their benefits following the retailer’s fall into administration last week.
More from: House of Fraser enters administration
Mike Ashley’s Sports Direct bought House of Fraser through a pre-pack administration for £90m on Friday 10 August.
As reported by Drapers last week, £600,000 is available to unsecured creditors under the prescribed part of insolvency legislation. Unsecured creditors include suppliers, landlords and the retailer’s 10,000 pension holders.
House of Fraser’s banks and bondholders will lose an estimated 77p for every pound lent, The Sunday Times reports.
House of Fraser’s pension funds, which have a combined deficit of £160m to £170m, have entered an assessment period for entry to the Pension Protection Fund (PPF).
The PPF cuts benefits by 10% for those below retirement age and pays less generous inflation-linked increases to all members.
The Sunday Times also reports that Ashley will go ahead with a pre-existing deal to close 31 of HoF’s 59 stores, with the loss of 6,000 jobs.
Meanwhile This is Money reports that Sir Vince Cable, the Liberal Democrat leader, is ordering an inquiry into Ashley’s pre-pack deal.
As reported by Drapers last week, Philip Day, owner of Edinburgh Woollen Mill Group is understood to have tabled a deal of £100m and offered to take on House of Fraser’s pension obligations.
Cable told the newspaper: “There needs to be an investigation by the Department for Business [Innovation and Skills] leading to a change in the law. Until the pre-pack process is reformed, there are open goals for people to exploit.”
A spokesman for administrators EY told Drapers: “At the time of our appointment there was no solvent solution available as previous offers that might have resulted in a solvent solution had been withdrawn. No other bid was rejected.”
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Readers' comments (2)
Anonymous13 August 2018 9:50 am
It seems Ashley's deal secured some payment to bond holders and plenty of work (fees) for the administrators while Days protected pensions and suppliers but was not as lucrative for administrator always the same !
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Anonymous13 August 2018 3:45 pm
The brands that Ashley has no use at all for will be badly hurt.
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