HIG Europe, a private equity firm, behind the acquisition of bed manufacturer, Silentnight, in 2011, could be hit with a contribution notice issued by the Pensions Regulator reports have shown.

Sky News stated that the firm could face a contribution notice from the regulator from an avoidance perspective, after the deal was completed as part of a pre pack administration process which left Silentnight’s members facing a lower pensions payout. HIG was able to abandon £100m worth of pension deficits as part of the deal with the Pension Protection Fund (PPF), following administration.

HIG initially offered the PPF 6p in every pound to back a company voluntary agreement compared with 65p in the pound for other creditors. The PPF rejected the offer forcing the company into administration.

A spokesperson for HIG European Capital Partners (HIG) said: “HIG purchased certain assets of Silentnight following its administration in 2011 by way of a pre-pack arrangement. The acquisition safeguarded some 1,000 jobs in Lancashire but did not include acquisition of Silentnight’s pension scheme liabilities.

“The pension scheme in question was subject to a significant deficit which had been allowed to accrue over a number of years, prior to HIG’s involvement and which had been exacerbated by reduced contributions as Silentnight sought to trade its way out of difficulty. Since that period, the Pensions Regulator has begun an investigation into the matter which we have complied with fully. The matter is subject to an ongoing legal process and therefore detailed comment would be inappropriate.”

A spokesperson for the Pensions Regulator commented: “The regulator has a continuing investigation into the potential use of its ‘moral hazard’ powers, but we are unable to comment further on this matter. We do not comment in detail on individual companies or pension schemes.”

Share Story: