In September 2011 we reported on the attention that the Pensions Regulator is paying to the acquisition of Brintons by the Carlyle Group, which saw Carlyle acquire the senior debt of Brintons freed of its pension liabilities – and to the similar situations at Polestar and Silentnight.
The Daily Telegraph reports today that the Pensions Regulator is:
“now investigating other ‘secret’ pre-packs where pension liabilities have been dumped in order to carve out profitable assets.
“We are investigating a series of transactions,” said Bill Galvin chief executive of the pensions watchdog. “There is Brintons and Silentnight, but also other cases that are not public.””
The Telegraph report continues that:
“The new regulatory powers [of the Pensions Regulator - which has the power to force contributions to pension schemes] have meant many private equity firms increasingly looking at copycat structures are taking legal advice on what the regulator response would be. However, some warn that the new laws also have negative unforeseen consequences.
“Banks are suddenly worried there is a creditor above them that would wipe them out – it is a new level of risk and means we have seen banks cut off funding or refuse to lend money for deals,” said a senior restructuring advisor.
Mr Galvin said: “For banks to say that it is colouring their approach to lending is pretty tough. Maybe we need to go out and give workshops to banks and lenders to talk them through what would need to take place before we considered something a moral hazard.””
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