Wednesday 25 November 2020 10:08 am

KPMG partner blasts “witch hunt” case at Silentnight tribunal

A partner at KPMG who is wrapped up in a case involving KPMG, Silentnight and the FRC has described the case as a “witch hunt” during an outburst at the tribunal. 

David Costly-Wood, a restructuring partner at KPMG is, along with the big four firm, accused of helping private equity firm HIG Capital force the insolvency of Silentnight, so it could acquire the business without its pension liabilities.

According to trade website Going Concern, in an outburst yesterday Costly-Wood said: “The fact that I am here being accused of dishonesty, and have never been dishonest in my business life … is frankly outrageous. 

“This whole case here is just a witch hunt and if [the FRC] can’t win the case, which they shouldn’t based on the facts, then it is simply a process of trying to trash my name in the press.”

Regulator the Financial Reporting Council (FRC) has alleged KPMG and Costley-Wood were conflicted when they arranged the sale of Silentnight to HIG Capital in 2011.

The FRC has claimed KPMG “assisted” HIG in its plan to force a liquidity crisis at Silentnight by acquiring and then calling in some of its debt, which allowed HIG to purchase the business out of insolvency while its £100m pension liabilities were transferred to the Pension Protection Fund.

KPMG has rubbished the claims, saying the assertions do not stand up to scrutiny. It argued the bed and mattress manufacturer had been in financial distress for years and that it knew its debts needed to be restructured – particularly its pension debt. 

Regarding Costley-Wood, Mark Phillips QC, who is representing the firm, said it did not make sense to allege he behaved inappropriately.

“Costley-Wood had nothing to gain from losing trust and confidence from the regulator that he has to work with for the rest of his career. If anything he was motivated to be honest with the regulator,” Phillips added. 

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