Reader's Digest Association (RDA), publisher of the Reader's Digest magazine, today put its UK arm, (RDA UK), under administration after the UK Pensions Regulator refused to approve a massive deficit in its UK pension fund.
Early this month, the Pleasantville, New York-based media company had said that it was reviewing its options in the UK after the UK Pensions Regulator refused to approve an agreement arrived last month with the trustees of its longstanding deficit pension plan and the UK Pension Protection Fund (PPF). (See: Readers Digest UK edges closer to bankruptcy over pension fund deficit)
"The decision by the RDA UK board to place the UK company into an orderly insolvency process follows the recent decision by the UK Pensions Regulator that it would not support an agreement already reached between RDA UK, the trustees of its pension plan and the UK Pension Protection Fund (PPF) to settle a longstanding pension plan liability," RDA said in a statement.
RDA UK, which employs 135 people in the UK and has 1,600 members on its pension fund, reported a pension deficit of £125 million.
The agreement, which contemplated a lump sum payment by parent company RDA plus an equity stake in RDA UK, was authorised by the US bankruptcy judge overseeing RDA's US Chapter 11 proceedings. It would have relieved RDA UK of significant financial obligations associated with its underfunded UK pension plan.
Under the proposed deal arrived last month, RDA would pump £10.9 million in cash and take a third of the UK business's equity to the pension fund's trustees in order to close the £125 million deficit.