HMV Collapse Leaves Pension Fund £26m Short

The pension fund of music, movie and games retailer HMV is unlikely to see a penny out of the £26 million the fund is owed by the company – despite the administrators charging fees of around £15 million to sort out the collapsed firm’s financial affairs.

Banks have also collected more than £38 million from the failed company, according to administrators Deloitte.

Pensioners and former employees in HMV’s defined benefit scheme are among a group of unsecured creditors who are owed a total of £156 million. The administrators do not expect any of them to receive any money when the firm’s finances are finally wound up.

The HMV pension fund holds retirement cash for employees of the stricken retailer and book store Waterstones, which was sold in 2011.

HMV finally closed in January 2013, shutting 223 stores as more than 4,000 staff lost their jobs.

Unsecured creditors

A subsequent rescue plan saved 140 stores and 2,600 jobs.

Record label EMI, a former owner of HMV, is one of the unsecured creditors for an undisclosed sum.

The label is believed to have acted as guarantor for shop leases valued at up to £150 million. The guarantees are believed to be one of the stumbling blocks in the sale of the record label.

The figures come from an interim administration report filed by Deloitte.

The report reveals the rescue raised £40 million which is earmarked by a group of banks that funded the retail chain up to the collapse into administration.

Also disclosed are other figures that show a payment of £4.5 million has already gone to Deloitte, with £5.5 million outstanding, while lawyers have billed £2.3 million and consultants working for the Canadian firm Hilco that mounted the rescue plan billed £2.7 million.

Pension protection

The HMV fund had applied for admission to the Pension Protection Fund.

Chris Martin, of Independent Trustee Services Limited, trustee of the HMV Pension Scheme, has reassured employees that their pensions are safe – but pay outs to employees who have not drawn down funds will not necessarily hit the amount they may have expected.

“The pension scheme is passing through assessment by the Pension Protection Fund,” he said. “The fund pays set levels of compensation regardless of the company debts, so fund members are protected to that level.

“I have no reason to doubt that the scheme is not eligible for protection by the fund.”

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