Pension fund trustees force firm into administration

Pension scheme trustees have won a shock legal battle to force Berkeley Berry Birch, a listed firm of independent financial advisers, into administration.

The victory in the High Court yesterday is the first time a pension fund has forced a company to wind itself up and sell its assets in order to fill the scheme's deficit and try to prevent pensioners losing part of their benefits by going into the government safety net, the Pension Protection Fund.

Previously, struggling companies unable or unwilling to meet the pension liabilities, such as Armstrong, a subsidiary of the Caparo industrial empire owned by the Labour peer Lord Paul, had been wound up by the company's directors.

Graham Pitcher, the managing director of GP Noble Trustees, a Nottingham-based trust company that was the sole member of the IFA's pension scheme board, said the court had backed its petition to wind up Berkeley Berry Birch using new powers under the 2004 Pensions Act.

He said: "BBB is the first of many companies that will be wound up [because of the pension trustees]. The 2004 Act has meant the balance of power has shifted to trustees and the pension fund with a deficit is a new creditor of the company."

BBB had been one of the five largest advisers in the country when it was created out of the reverse takeover of Berry Birch & Noble by Berkeley Financial Services in 2002. But it had been heavily loss-making and last year was forced to cease most of its operations by the regulator, the Financial Services Authority, for lack of capital. BBB's shares were suspended at 5p each on 1 December as the company tried to sell off assets and recapitalise itself.

Mr Pitcher, who represented about 250 staff and 33 directors that were members of the pension scheme created by Berry Birch & Noble, said BBB had failed to complete the recapitalisation. And, as the company was still losing money, he decided to pull the plug. He said an actuarial valuation last year revealed the pension scheme had £6m of assets but a deficit of £9.2m if it was wound up.