Guinness Peat Group has received a warning notice from The Pensions Regulator because the Coats pension scheme is insufficiently resourced.
The Coats pension scheme, which has nearly 30,000 members, has a deficit of £148m.
GPG has said it will now discuss the issue with TPR and if no agreement it reached a decision will be made by the regulator’s determinations panel.
Mike Clasper, chairman of GPG, said the company would “vigorously defend” its position.
He said: “As previously indicated the board, having taken external advice, submitted calculations to TPR which showed that all the sponsoring companies for the Coats plan were sufficiently resourced as at the relevant date.
“It is therefore extremely disappointing to receive the warning notice from TPR in relation to a scheme for which a recovery plan was agreed with the trustees in 2013.
“Coats continues to demonstrate its ability to support the Coats Plan from its operating cash flows, while generating the levels of free cash needed to sustainably grow the business.”
If the issue does go to a TPR determinations panel it is unlikely to go to a hearing before the first half of 2016, GPG has said.
The notice could lead to GPG having to increase the funding towards the Coats pension scheme.
Coats is a textile firm founded in the 18th century in Scotland.
Its pension scheme was launched in 1988 following the merger of Coats Patons plc, Vantona Viyella plc and the Nottingham Manufacturing Company plc.
It was bought by GPG in 2003.
