Silentnight, the struggling bedmaker, has been sold to private equity business H.I.G Capital in a pre-pack administration. Silentnight had hoped to continue trading, under the control of the directors, using the rescue mechanism the Company Voluntary Arrangment or CVA. This would have allowed the company to pay off a proportion of its debts over an agreed time scale.
For the CVA to have been successful 75% of the creditors (by value) would have needed to support the proposal but the Pension Protection Fund indicated it would not support the rescue deal. This was despite the HMRC, the suppliers and the employees all indicating they would vote in favour. Under the terms of the sale, the Pension Protection Fund (PPF), which is Silentnight's largest creditor, will have to take over the pension fund and its shortfall.
Of course there is nothing stopping a company exiting a CVA via a trade sale in other situations.
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."
Read our page on pension liabilities.