KPMG insolvency practitioners have sold struggling mattress retailer Silentnight to private equity business H.I.G Capital in a pre-pack administration.
Two weeks ago Silentnight had proposed a Company Voluntary Arrangement (CVA), which would reduce debt and repay creditors over a contracted period of time.
However, for a CVA to be successful, it needs 75% of creditors – by value – to vote in its favour. The creditor vote was scheduled for Friday 6 May but was cancelled as the business’ largest creditor, the Pension Protection Fund, made it clear it would veto the proposal. This is despite backing from suppliers, employees and HM Revenue & Customs.
The private equity business bought all of Silentnight’s brands and other assets.
KPMG administrators were unable to comment at the time of publication.
Neal Mernock, chief executive of Silentnight, said: “Whilst we are disappointed that the CVA was not successful, this deal with H.I.G. Europe safeguards the jobs of our 1,250 employees and enables Silentnight to continue its proud history of manufacturing and distributing beds across the UK and Ireland.
Silentnight ran into trouble earlier this year when its lender withdrew credit facilities and the company found itself with an “onerous” pension deficit.
Mark Kelly, partner of HIG European Capital Partners, a UK division of H.I.G. Capital, said: “Silentnight is a strong, profitable business with a 21% market share and a position as the largest manufacturer in its sector in the UK and Ireland. We are delighted to have acquired a business of this standing and heritage, and look forward to working with the current management team to further strengthen and develop its position over the coming years.”
David Costley-Wood, joint administrator of Silentnight and restructuring partner KPMG, said: “The sale puts Silentnight on to a surer footing, with a new funder and all 1,250 jobs secure.
“While a company voluntary arrangement (CVA) had been proposed in an attempt to avoid administration, it became apparent that a compromise with all creditors could not be reached using this mechanism.
“…In this instance, it has not been possible to agree a CVA which is acceptable to all parties and therefore a ‘pre-pack’ administration has been the next best method of resolving Silentnight’s financial position.”
Costley-Wood, Brian Green and Mark Firmin, all partners at KPMG, were appointed joint administrators on Saturday 7 May.
Does Darwin's theory apply to taxation? Colin ponders...
The EC has been instructed to draft a European Union (EU) directive authorising an EU financial transaction tax, which would apply to ten of the EU’s 28 member states
Steve Absolom and Will Wright from KPMG Restructuring have been appointed joint administrators to City Motor Holdings and associated companies
Partners from Johnston Carmichael have been appointed as joint administrators to Axon Well Interventions Products UK