Reader’s Digest UK goes into administration
17.02.10 | Victoria Gallagher
Reader’s Digest Association UK has filed for administration after its board decided that it was financially unable to meet the obligations of its underfunded pension scheme and could not sustain its own operations. It employs 117 employees.
Its parent the Reader’s Digest Association had been trying to work on a deal to come out of Chapter 11 in the US, but delayed the move as it tried to sort out the UK subsidiary’s pension deficit. However, the UK Pensions Regulator said it would not support the arrangement it proposed, which involved putting a lump sum payment of £10.9m into the pension fund, plus an equity stake in RDA UK. Following it decision to cut its UK arm off, the parent said it now expected to emerge from Chapter 11 “promptly”.
Phillip Sykes, Jeremy Willmont and Bill Beach of Moore Stephens have been appointed joint administrators. A statement from Moore Stephens said: “The joint administrators are reviewing Reader’s Digest’s financial position and intend to continue RDA’s trading activities, while seeking a buyer for the business.” RDA UK employs 117 people, but the administrators’ said it was “too early to say” whether there would be any redundancies. Reports have said that the company’s pension deficit was £125m although the administrators’ could not confirm this.
The UK company had previously said it had “ample liquidity” and a “very healthy” balance sheet. Chris Spratling, m.d. of the UK business, previously told The Bookseller: “The UK operation has for traded very profitably many years and continues to do so. The UK business has ample liquidity and remains unaffected by the proposed Chapter 11 filing in the US.”
RDA said that it expected that its other global operations would continue to operate as normal and without material impact as a result of the UK insolvency.