The owner of Bernard Matthews Ltd is lining the turkey farmer's pension scheme up to enter the Pension Protection Fund ahead of the sale of the business, according to reports.

Unnamed sources told Sky News that the PPF has confirmed that the scheme would be eligible to join the lifeboat fund. It also reported that the pension scheme has a deficit of approximately £16m with around 750 members, although this was not confirmed by Bernard Matthews’ current owner Rutland Partners.

According to the report, this would allow for the sale of the majority of the business through a mechanism known as a pre-pack administration, where a buyer is lined up to take on the company’s assets, but without liabilities such as its pension deficit.

The reported favourite to take on the business is the 2 Sisters Food Group but sources told Sky News that it is not prepared to complete a transaction unless Bernard Matthews' pension deficit is taken on by the PPF.

Under PPF rules, existing pensioners would not see their payments change but could see reductions to future increases, while members who are yet to retire will see their payouts discounted by 10 per cent.

Accounts filed on Companies House for the financial year ending 28 June 2015 show that Bernard Matthews made an operating loss of £859,000.

Both Rutland Partners and 2 Sisters Group declined to comment on the report. The PPF is yet to respond to the request for comment.

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