British high street retailer, Debenhams, failed to pay its agreed April deficit recovery contribution (DRC) as the firm edges towards administration.
According to the Sunday Telegraph, Debenhams had confirmed that they did not seek permission from The Pensions Regulator (TPR) to miss the contribution.
TPR has recently issued guidance stating that it would be easing regulatory action against employers that suspend DRCs.
Debenhams had agreed a monthly payment into its defined benefit scheme, which reportedly has a substantial funding deficit.
It also announced this morning that it will again be filing for administration to protect itself from legal action from creditors while its stores are closed.
As reported by out sister publication, Retail Systems, the group is making preparations to resume trading its stores once government restrictions are lifted, but is preparing to enter a “light touch” administration that will see the existing management team remain in place under the direct control and supervision of the administrators.
A statement noted that it has the support of current lenders and they plan to provide the funding for the administration. The majority of the employees in the UK are currently being paid under the government’s furlough scheme, while payments to suppliers will remain unaffected and be paid to terms.
The retailer had previously entered administration in April 2019, when it also entered a Pension Protection Fund (PPF) assessment period.
A month later (May 2019), it left the assessment period following the approval of company voluntary agreements (CVA) by creditors.
Speaking to the Sunday Telegraph, a Debenhams spokesperson said: “Debenhams is not ‘dumping’ its pension liabilities.
“Discussions with the trustees and the PPF are continuing for a temporary suspension in contribution payments, given TPR’s recent announcement that companies could access a three-month pension contribution holiday over the Covid-19 disruption period.”
The scheme is reportedly in close consultation with TPR.
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