The pensions rescue service has forced the appointment of a second administrator to scrutinise the finances of Laura Ashley prior to its collapse into administration in March.
The new administrator, FRP Advisory, is also likely to investigate the role of Laura Ashley’s former directors, including chairman and chief executive Ng Kwan Cheong who stepped down in January.
At the time of its collapse, the fashion chain, which operates more than 150 British stores, had a pension fund deficit valued at £50m on the basis of a buy out by an insurance firm. Administrators at PwC, who were appointed in March, reckon they can raise only £27m from selling off the company’s assets, according to their latest report filed at Companies House, compared to total debts of more than £162m.
Laura Ashley’s brand, archive and online business were sold to restructuring firm Gordon Brother in April. The company’s stores are still in the hands of administrators and expected to permanently close with the loss of more than 1,600 jobs once stock is cleared. Its manufacturing business is also on the market.
The Pension Protection Fund (PPF), an industry-backed body that acts as a safety net for the defined benefit pensions of insolvent companies, said it had requested the appointment of an additional administrator, FRP Advisory, last week to “investigate the activities of Laura Ashley Limited prior to the company’s insolvency”. It added: “Members of the Laura Ashley retirement benefits scheme, which remains in PPF assessment, can be assured of our ongoing protection.”
Pension savers who have not yet retired are protected by the lifeboat scheme but will only receive 90% of the pension payments they should have received up to a capped rate of £37,315 a year.
A spokesperson for the Pensions Regulator, a body which protects workplace pensions and has the power to recover late or missing payments from a business owner on behalf of a scheme, said: “We are monitoring the situation at this challenging time and working closely with the company, its advisers, the PPF and trustees of the Laura Ashley retirement benefits scheme as they work to secure the best possible outcome for members.”
Sarah Webb, who worked in retail operations for Laura Ashley, was made redundant by conference call despite her 33 years service with the company. Webb is “heartbroken” by the company’s collapse in March and the financial mess it has left her in.
“I was given three hours notice of a conference call with everyone on mute except the person delivering the news,” Webb explained. “We didn’t even have a consultation. I think almost everyone is heartbroken as so many of us loved the company and have lost a work family as well as our job.”
At 57, Webb, who belonged to the defined benefit pension scheme, is unemployed for the first time in her life: “The biggest question mark for me is over my pension. I have no way of now knowing what my pension will finally be at a crucial time of my life.”
PwC said: “We are sorry it was necessary to announce redundancies at what is a very challenging time. We are committed to supporting affected staff and this includes working with various agencies and with other employers who may have vacancies.”