The UK’s pensions lifeboat has helped to block the sale of a packaging company whose customers include Marks & Spencer (Frankfurt: 534418 - news) and Unilever (NYSE: UL - news) after a prospective buyer drew up plans to dump its retirement scheme obligations.
Sky News understands that the pension scheme of Pulse Flexible Packaging, which is based in Bury, Lancashire and employs 350 people, prevented a takeover by an unnamed buyer last week.
Pulse was forced to call in administrators at KPMG after failing to secure new funding that was required to keep the business afloat.
Unusually, the pension scheme was already a secured creditor of the company, having become a shareholder following a previous financial restructuring.
The PPF is now expected to take on the 700 members of the Pulse scheme, which has a buyout deficit estimated at £80m.
Creditors are expected to recover just £4m from Pulse.
Pre (Shanghai: 600048.SS - news) -pack administrations are a valuable part of the UK's insolvency regime, and have saved thousands of jobs by enabling businesses to be restructured in order to secure a viable future.
The PPF has warned, though, that the system is open to abuse, because company-owners can shed onerous obligations before selling the restructured entity back to themselves.
Bernard Matthews, the turkey producer, and Agent Provocateur, the lingerie chain, have both been the subject of recent pre-pack deals, although only the former has aroused controversy over its treatment of pension scheme members.
The Financial Times calculated this week that companies have used pre-pack sales to offload £3.8bn of pension liabilities in recent years.
KPMG is acting as administrator to Pulse, and said last week that "operational challenges have led to an additional funding requirement which has prompted it to enter into administration".
"We are currently assessing whether we can continue to trade the business while we seek a buyer, and would encourage any interested parties to contact the joint administrators as soon as possible," Jonny Marston, a KPMG partner, said.
The packaging group trades from two sites, at Bury and Saffron Walden, with production having ceased until KPMG decides whether trading can resume.
A PPF spokeswoman said: "We are aware that Pulse Flexible Packaging Limited has gone into administration.
"As a result, we expect that the pension scheme will enter the PPF assessment period, and members can be reassured that we are there to protect them."