Wilko owed £625m when it collapsed, including £548m to unsecured creditors who will receive less than 8% of what they are owed, documents reveal.
The budget homeware retailer’s pension fund is left more than £50m in deficit and is unlikely to receive more than £4m back from the breakup of the company, which called in the administrators PwC in August.
The chain failed owing more than £400m, according to PwC’s report, which says the last of its near-400 stores will close on 8 October with almost 12,500 jobs lost.
Unsecured creditors, who include suppliers, employees and the pension fund, will receive between 4% and 8% of what they are owed by the group’s main Wilko Ltd entity, whose debts total more than £460m, and less than 1% of that owed by its sister group.
Suppliers, including the manufacturers GlaxoSmithKline, Procter & Gamble and the logistics firm GXO, are owed more than £170m, while the tax authorities are owed more than £26m, the documents show.
Secured creditors, led by the restructuring specialist Hilco, which was owed nearly £40m and Barclays Bank, which was owed £2.4m, will be repaid in full. HMRC, which is described as a preferential creditor, is expected to be repaid almost in full.
The deficit for Wilko’s defined benefit scheme, which has 2,000 members, has narrowed considerably since 2019 as the company injected more than £4m a year to help support it and £8m last year. When a company fails, however, the calculation of the deficit rises on the basis of the costs of handing it over to an insurance fund because there will no longer be profits from a functioning company to provide support.
On that basis, the fund was just over £70m in deficit according to the administrators’ report, but had security over £20m of Wilko’s property, reducing the money required to plug the gap to £50m.
The scheme is now being assessed for entry to the industry-funded pensions lifeboat scheme, under which those of pensionable age and already collecting their cash will receive their full payout but other savers’ funds will be cut by 10%.
The Pensions Regulator, however, is scrutinising the handling of the company’s finances in the run-up to its collapse. The regulator has the power to pursue owners to plug pension shortfalls if their actions are deemed to have put savers’ benefits at risk.
John Ralfe, an independent pensions expert, said: “The Pensions Regulator has wide legal powers to force ‘connected parties’ to plug deficits when a company goes bust. There is no question that it will go after the Wilkinson family to claw back some of the dividends paid in the last few years.”
Wilko’s family owners have paid themselves £9m in dividends since 2019, according to administrators, as underlying profits halved from £33m to £16m and sales slid by more than 15% to £1.31bn.
The Wilkinson family has been approached for comment.
