Monarch collapse: Frank Field has more questions for the Pension Protection Fund over airline's ditched pension scheme

 
Rebecca Smith
Monarch ceased trading last month
Monarch ceased trading last month (Source: Getty)

The chair of the Work and Pensions Committee has written to the Pension Protection Fund (PPF) raising further concerns over the circumstances surrounding the offloading of collapsed airline Monarch's pension fund back in 2014.

The Mantegazza family carved out Monarch's retirement scheme as part of a £1 sale to Greybull Capital.

Frank Field said today that he had written to the PPF's boss Alan Rubenstein raising concerns that the PPF and the Pensions Regulator "experienced some difficulty in negotiating a minimally acceptable dowry for the scheme - due to the Mantegazzas being insufficiently daunted by the prospect of TPR's moral hazard powers being deployed in the event of no deal".

Read more: How Swiss billionaire tried to dump Monarch pension fund for less than £10m

Last week, the PPF's restructuring head told City A.M. that the former owners of Monarch tried to offload the pension scheme for under £10m.

Three years ago, a deal was struck that allowed the pension scheme to fall into the PPF, with the Mantegazzas making a £30m mitigation payment. In addition, Greybull gave the PPF a 10 per cent shareholding in Monarch and the airline issued the lifeboat a £7.5m loan note.

However, the first offer was a cash payment of under £10m. Malcolm Weir, the PPF's restructuring head, told City A.M.: "We thought: 'When you’ve got something sensible to offer, come back and talk to us.'"

Weir said compared to the "hundreds of millions of debt" that the company was being released from, "it just wasn't proportionate".

Field said in light of those comments, a more robust anti-avoidance regime could have made the process "less protracted and resulted in a better financial settlement for the scheme".

He has asked the PPF's chief executive for details on what the PPF's opening bid was for the financial settlement to be paid by the Mantegazzas, and how many different financial proposals were made before the regulated apportionment arrangement was agreed.

Field said:

Compared to the hundreds of millions pounds of debt they were being released from, the deal was a good one for the Mantegazzas only. Both their initial derisory offer and the final £30m one betray the inadequacies in TPR’s armoury of anti-avoidance powers.

There is clearly nothing to induce a company, the family head of which is reportedly worth £3.4bn, to come to the table with a serious offer.

He added: "Had the Mantegazzas had the threat of punitive fines such as we have recommended hanging over them, this deal would have been concluded much more satisfactorily."

Monarch collapsed at the beginning of last month, citing the weakness of the pound, as well as the drop in demand for some destinations due to terrorism concerns.

Last month, Monarch's former owner Greybull, pledged to hand back cash to the government should it make a profit from the carrier's collapse.

Read more: Greybull makes Monarch profit promise

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