Scourge of BHS Frank Field turns his guns on Monarch bosses

The Times - 12 Oct 2017

Workers and customers of the collapsed Monarch Airlines have been left to foot the bill while the “mega-rich” owners walk away with a “bumper profit”, a senior MP has claimed.

Frank Field heads the Commons work and pensions committee, which investigated the collapse of BHS before Sir Philip Green handed over £363 million to plug a pension hole.

The Labour MP has written to the head of the Pension Protection Fund, the industry-funded lifeboat, querying a £7.5 million secured loan note granted to the PPF by Greybull Capital, Monarch’s private equity owner.

Calling yesterday for better protection for pension scheme members, Mr Field said: “How can it be that once again, mega-rich individuals could walk away from a collapsed company with a bumper profit while ordinary people pick up the bill?” As the fallout from the carrier’s failure spreads, the MP also raised questions about Greybull’s possible priority over competing creditors in the aftermath of Monarch’s administration.

Mr Field’s letter to Alan Rubenstein, chief executive of the fund, was sent on Tuesday and released yesterday. He asked whether the fund had received any payments from the £7.5 million loan note, where the outstanding debt owed to the fund “rank[s] in the order of creditor preference” and “what action will the PPF take to secure any remaining monies due”.

When administrators at KPMG were called in last week there were suggestions Greybull stood to lose ten of millions of pounds. However, closer scrutiny of a series of complex financial arrangements since the ailing airline was bought for £1 in 2014 led to reports that it could emerge financially unscathed. Greybull’s acquisition of Monarch from Switzerland’s Mantegazza family was cleared by the Pension Regulator as part of a deal in which Monarch’s pension scheme was separated and placed into the fund under a regulated apportionment arrangement.

In addition to the loan note, the scheme received £30 million from the previous owners and the fund was also given a 10 per cent equity stake in the restructured business. The deal was supposed to ensure pensioners benefitted from any potential improvement in the performance of Monarch.

Mr Field has asked whether Greybull’s acquisition had “compromised the interests of the PPF” and if it “was still satisfied” that it was the “best outcome achievable at the time”.

The Labour MP said yesterday that the law must be changed to “robustly protect pension schemes against owners seeking to line their pockets while avoiding their responsibilities”. In a statement issued before a formal response to Mr Field’s letter, the fund defended the 2014 Monarch deal. Malcolm Weir, director of restructuring and insolvency, said: “The expected recovery for the pension scheme if Monarch had gone bust in November 2014 was £0. We believe that the protections we negotiated in November 2014 to ensure our debt and equity could not be superseded or watered down have operated as intended.”

The pension scheme had 2,441 members and a deficit of £594 million on a buyout basis the year before Greybull engineered the acquisition.

A spokesman for Greybull said that Monarch received more than £250 million of new capital under its ownership and all financing was approved by regulators. It added that the loan note would be “paid in full” if assets were recovered by administrators.

Alex Ralph, The Times