Former employees of the collapsed contractor hit by new revelation
Former employees of collapsed contractor Rok have suffered a fresh blow after administrators revealed a £90m black hole in its defined pension schemes.
A report from PricewaterhouseCoopers (PwC), which was called in as administrator last November, reveals themassive deficit in the company’s two main defined benefit pension schemes run by Rok Building and Rok Development.
Rok stunned the City when it collapsed with debts of around £360m.
Rok, was heavily dependent on local authority maintenance work, blamed public spending cuts for its collapse.
More than 3,400 of its 3,800 staff lost their jobs following the collapse and now many of those workers face huge short falls in their pensions.
As a creditor, pension schemes rank behind the claims of secured creditors, most notably Rok’s banks which are owed around £75m.
The scheme may end up in the Pension Protection Fund, which may safeguard up to 90% of employees entitlement.
The Pensions Regulator may issue a financial support direction (FSD), a move that would recognise the pension shortfall an expense of the administration and give it priority over all other creditors, including the banks.
But FSDs are currently embroiled in a legal dispute between the regulator and the administrators to Lehman Brothers and collapsed telecom giant Nortel.
An appeal by the administrators is expected to be ruled upon later this year but a defeat for the regulator is likely to downgrade the standing of pension deficits in administrations.
However, even if the appeal is successful for the regulator, it is unlikely Rok’s administrators have the funds to fill much of the deficit.
Rok’s principal asset is a legal claim against Harrison, a Yorkshire construction company from whom Rok bought contracts for £4.8m in 2007.