Cluttons: pensions body investigating pre-pack deal to save agency

Last week’s acquisition of high-end agency Cluttons from pre-pack administration is to be investigated by the Pension Protection Fund.

We reported on Thursday that Cluttons had been bought out of pre-pack administration by a so-called ‘turnaround’ business, RCapital. Pre-pack administration is when a business' assets are negotiated over and acquired before the appointment of administrators.

In the deal, some of Cluttons’ central London residential offices were to be closed.

Now the Pension Protection Fund has told the Financial Times: “We can confirm that we have been made aware of the pre-pack administration of Cluttons LLP and we will be taking our normal steps to investigate the circumstances behind this.”

The FT says that around 300 members of the Cluttons pension scheme now face cuts to their retirement income, of up to 10 per cent for people yet to retire, under the reduced compensation that the PPF pays. The Pension Protection Fund’s main function is to provide compensation to members of eligible defined benefit pension schemes, when a company faces possible insolvancy. 

The Pensions Regulator would not comment on whether it was also involved in the investigation.

The newspaper explains that pre-packs have come under scrutiny in general because of concerns that they lack transparency and allow liabilities, such as pension deficits, to be shed as part of the deal.

A statement to the newspaper from the agency, which employs around 450 people, said: “Cluttons is a strong, profitable and well-run business. However, the real estate markets in which it operates, and in particular its transactional businesses, have suffered from difficult trading conditions. The medium-term outlook is that these difficulties will continue.”

It is believed that the agency will shut its Belgravia, Blackheath and Clapham residential sales offices as part of the RCapital deal.

You can see the FT article here.