Wilko’s founding family should be pursued for the recovery of millions in dividends received before the retailer’s collapse in August, urged the chair of the Commons business and trade committee, emphasizing the need for UK regulators to “explore every option.”
Labour MP Liam Byrne made the call for regulatory action in the Commons yesterday after former Wilko chair and the granddaughter of its founder Lisa Wilkinson was grilled by cross-party committee over Wilko’s collapse, which followed £15m in payouts to family trusts over almost a decade.
Wilko’s collapsed into administration back in August led to 400 store closures and 12,000 job losses.
After its collapse the business left its pension fund nursing a £50m black hole, also owing about £625m in debts.
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In the House of Commons, Byrne said: “On Tuesday we finally had answers from Lisa Wilkinson about the mistakes that led to the collapse at that much-loved firm.”
“But Miss Wilkinson was not able to answer why 70% of the profits in the last four years were paid out in dividends to family trusts, while the deficit in the pension fund mounted, to now £50m.
On Tuesday we learned that 70% of the Wilko profits were paid out in dividends – while the pension fund was shortchanged.
Today I asked Ministers to look at how those dividends are repaid to Wilko’s pensioners 👇#wilko @GMB_union pic.twitter.com/OaDE5kZcbT
— Liam Byrne MP (@liambyrnemp) November 30, 2023
“Will the secretary of state ensure that regulators explore every option to claw back those dividends so that Wilko pensioners are not short-changed?” Byrne asked.
Wilkinson told the business and trade committee on Tuesday that the £15m in dividends paid out to shareholders in the past nine years were in a holding company owned by family trusts and tied up in investments that were difficult to access.
She claimed it would not have been possible to use that cash to help cut Wilko’s pension deficit because of a duty to shareholders.
She also denied having used the dividends to pay herself in a “personal capacity”, and said the family did not have enough funds “to make a difference” in the retailer’s eventual collapse.
“I don’t recognize that statement that we are one of the wealthiest families in the country and I don’t have assets to fill a £50m hole in the pension scheme,” she said.
In response to Byrne’s statement, business minister Kevin Hollinrake, said: “Clearly, the insolvency service is looking at this, is looking at the director’s conduct report from PricewaterhouseCoopers, the administrators.
She added that it was clear in the report so far “they have no evidence of director misconduct, but there’s further work ongoing.”
The Insolvency Service is due to meet the administrators PwC in January to look at the situation as it unfolds.
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1 Comment. Leave new
I find this route being described by some of these MP’s really sinister, what essentially this would suggest is that any profits earned by any business ever in its life, or indeed dividends earned and paid out to any shareholder (family or otherwise) could essentially be clawed back in the future should the business falter. It’s a ridiculous notion.
If this was allowed to happen it would set a very dangerous precident and also ultimately completely undermine the basis of a Ltd company being free of personal obligation – which would send a shiver up anyones spine and stop most future businesses from even being created.
Additionally, the wider point here (as we heard in the select committee interview) is that Wilko up to 2022 was very profitable and at the start of 22 had over £100,000,000 in the bank. Trade dropped off, and the business started to falter, didn’t catch itself and fix itself in time to save itself and spent the £100,000,000 reserves in the process of trying to stay alive.
Anybody who tries to claim that a business who is profitable, takes dividends of such a small amount (in the grand scheme of things £15 over 9 profitable years, with £100m still left in the bank) is acting irresponsibly simply just does not understand how business works.
To be clear, as shareholders, they would be been completely entitled to draw every penny and more of the £100m if they really wanted to, This is not a BHS type scandal, everything about this is just good business practice up to the point of the business starting to encounter problems.
This is a very dangerous precedent and a very irresponsible and childish call from uninformed MP’s who simply will never understand how business works.