PensionsOct 19 2017

PPF to claim money from Monarch associated companies

twitter-iconfacebook-iconlinkedin-iconmail-iconprint-icon
Search supported by
PPF to claim money from Monarch associated companies

The Pension Protection Fund (PPF) will demand payments from other companies in the Monarch group in an attempt to claw back some of the £7.5m unpaid loan note.

The Monarch Airlines Limited Retirement Benefits Plan was transferred to the pension lifeboat in 2016 after the struggling airline was bought by Greybull Capital for £1 in 2014.

The 50-year-old airline collapsed earlier this month with the loss of about 2,000 jobs due to a price war with low-cost rivals.

Alan Rubenstein, chief executive of the PPF, said the demand for payments will include Monarch Engineering Services, the engineering business which is part of Monarch Group and which, according to press coverage, still has value.

Mr Rubenstein was replying to a query from the chairman of the Work & Pensions select committee, Frank Field.

The PPF chief executive said: “We will lodge claims for our unpaid loan notes in the administrations of the Monarch companies, although any recoveries from this source will depend on the quantum of assets realised.

“We believe that the protections we negotiated to ensure our debt cannot be superseded or watered down have operated as intended.”

Mr Field had written to the PPF querying the financial settlement for Monarch Airlines’ pension scheme.

Besides the loan note, which the first repayment was due to be made on 31 October 2017, the pension lifeboat also received a 10 per cent stake in the airline and £30m cash from the airline’s former owners, the Mantegazza family.

Before the takeover from the PPF, the Monarch pension scheme had reportedly been carrying a deficit of £158m.

But the pension lifeboat is not expecting to realise a return on the equity holding.

Mr Rubenstein said: “Our practice is always to value such equity stakes initially in our books at zero, since almost inevitably the new company starts with either zero or negative equity.

“On that basis we have made no loss on our stake.”

Mr Rubenstein also reassured the committee that Monarch scheme members will see "no change to their entitlements on account of the recent insolvency event, given these were aligned with PPF benefit levels at the point the scheme entered assessment”.

maria.espadinha@ft.com