KPMG administrators appointed to Dawson International

by Rachael Singh

More from this author

16 Aug 2012

  • Comments
kpmg-canada-square-1

KPMG ADMINISTRATORS have been appointed to a UK manufacturer after it failed to strike a deal with the Pension Protection Fund.

Dawson International, the UK's largest cashmere manufacturer, has collapsed after the Pension Protection Fund (PPF) rejected a deal to take on pension liabilties at the 140-year-old company.

Blair Nimmo and Gary Fraser, from KPMG, were appointed joint administrators to the business, which employs about 180 staff. It has two trading subsidiaries based in the US and UK.

Dawson offered cash upfront, as well as 33% of the group's share capital, to the PPF, in exchange for it taking on the pension liabilities. However, the PPF shot it down in July.

"Our proposal, which was all we could possibly afford, would have delivered significantly more to the PPF than it is likely to receive from administration," said Dawson International chairman David Bolton.

He added that the PPF decision was "deplorable" and that the business made all contributions to the pension scheme as they fell due, while shareholders received no dividends for more than ten years.

"There was no commercial sense in turning down this proposal and forcing the business into administration," he said.

He added a propoposal was submitted to the PPF more than 15 months ago, and labelled the system "flawed", due to the time and costs involved.

"Those tasked with regulation must be prepared to recognise what is a significant and growing problem for many companies struggling with crippling legacy pension issues, and bring a more enlightened approach to protecting pension members' interests," he said.

Following rejection from the PPF, Dawson was served a notice to repay £129m of debt to the Pension Scheme Trustees by 19 August, something the business was unable to fulfill.

There are currently only about 60 employees contributing to the pension scheme at Dawson, with more than 3,500 deferred (former workers) and pensioner members and a pension fund deficit of more than £50m, according to a consultant at actuarial business Barnett Waddingham.

Barnett Waddingham consultant Malcolm McLean warned there could be more administrations to come as companies struggle to keep up with pension liabilities.

"Dawson is not the first and probably won't be the last company to come adrift as a direct result of its pension legacy," he said.

"Reducing the size of the company's operations and its attendant workforce doesn't cancel out all the pension liabilities that have built up over the preceding years. In fact, those liabilities are likely to grow as more and more former workers with preserved rights within the scheme reach retirement age."

According to McLean, Dawson had been making £400,000 a year in regular contributions but was paying an additional, unsustainable £1m annually to keep the scheme running.

The US subsidiary, which operates as Dawson Forte, is not in administration and continues to trade under the control of its directors. KPMG administrators will continue to trade Barrie as a going concern while it seeks a buyer.

In the year ended 31 March 2012, Barrie's turnover was £9.7m and generated a pre-tax profit of £1.1m. 

Visitor comments

blog comments powered by Disqus
display:none

Add your comment

We won't publish your address


By submitting a comment you agree to abide by our Terms & Conditions

Your comment will be moderated before publication

Submit
  • Send

Financial Planning and Performance AnalystCabinet Office-Greater London-Competitive

 
 
 
 
 
 
 
 

 

Newsletters

Get the latest financial news sent directly to your inbox

  • Best Practice
  • Business
  • Daily Newsletter
  • Essentials

Careers

Search for jobs
Click to search our database of all the latest accountancy roles

Create a profile
Click to set up your profile and let the best recruiters find you

Jobs by email
Sign up to receive regular updates with the latest roles suitable for you

Briefings

budget-management

Why budgeting fails: One management system is not enough

If budgeting is to have any value at all, it needs a radical overhaul. In today's dynamic marketplace, budgeting can no longer serve as a company's only management system; it must integrate with and support dedicated strategy management systems, process improvement systems, and the like. In this paper, Professor Peter Horvath and Dr Ralf Sauter present what's wrong with the current approach to budgeting and how to fix it.

cchcover

iXBRL: Taking stock. Looking forward

In this white paper CCH provide checklists to help accountants and finance professionals both in practice and in business examine these issues and make plans. Also includes a case study of a large commercial organisation working through the first year of mandatory iXBRL filing.