T Groocock & Co (Rothwell) Limited retirement benefit schemes
We publish regulatory intervention reports as part of our commitment to being transparent about how we regulate and enforce. By sharing the cases we investigate and the action we take, we aim to help trustees, employers, advisers and others understand our expectations and learn from real examples.
This case illustrates how we will take action to protect members where corporate activity has weakened support for a defined benefit (DB) scheme. It reflects our new enforcement approach, which focuses on addressing the risks and harms that matter most to members, securing positive outcomes, and taking targeted action whether risks arise in large schemes or small ones.
This report will be useful for anyone involved in corporate activity affecting DB pension schemes, including trustees, employers, directors, shareholders and advisers.
Published: 30 October 2026
Case summary
We took action following a series of transactions involving T Groocock & Co (Rothwell) Ltd (TGC), the employer of two DB schemes.
TGC transferred its business, assets and pension liabilities to a new employer but retained ownership of a valuable freehold property. As mitigation for the loss of the property, a replacement guarantee was put in place, which depended on the financial performance of a business that was already loss-making.
The new employer, Padders (Kettering) Ltd (PKL), subsequently became insolvent and the schemes entered Pension Protection Fund (PPF) assessment. They had a combined section 75 debt claim of £3.8 million but recovered £645,460 from the liquidation, equivalent to 17 pence in the pound. The guarantee provided no value.
We intervened because we considered that the transactions had removed valuable covenant support without sufficient and appropriate mitigation. This exposed members’ benefits to a foreseeable risk while the directors and shareholders of TGC (the targets of our regulatory action) received significant financial benefits.
We sought Contribution Notices against TGC and 10 individuals totalling £3,358,858, plus an adjustment for the passage of time, to secure financial support for the schemes. A Contribution Notice requires the recipient to pay a specified amount to a pension scheme.
The case concluded through a settlement, and all payments due under the settlement agreement were received by June 2026.
Background
TGC was a family-owned shoemaking business and the sole employer to two separate DB pension schemes established in the 1970s: the main scheme and the directors’ scheme.
Tom Groocock was the head of the business, and a number of family members worked with him for TGC, some having roles on either the board of directors or the trustee boards from time to time, as well as being shareholders.
In the 2000s, TGC purchased the freehold of headquarters in Kettering, which included a head office, warehouse, factory and retail outlet.
From the year ended 31 January 2016 onwards, TGC reported net losses. Meanwhile, its net liabilities to the schemes were valued on a buy-out basis at £2.964 million for the main scheme (as at 1 May 2017) and £408,000 for the directors' scheme (as at 31 January 2018).
In late 2017, TGC appointed Grant Thornton to advise on strategic options for the business in light of its poor financial performance and the fact that certain directors were seeking to retire from the business. Among the various options considered, Grant Thornton advised that a members’ voluntary liquidation (MVL) would provide the greatest certainty of shareholder returns once the pension liabilities had been satisfied.
In early 2018, TGC’s directors were approached by The Florida Group Limited (TFG), another footwear company facing financial difficulties. TFG was owned by The Little Norwich Shoe Company Limited (LNSC), which was itself looking for a buyer. While TFG had been profitable until 2016, it was forecasting losses of £0.3 million in 2017 and planned to close its UK manufacturing operation.
TFG and TGC initially considered both a merger and TGC’s acquisition of TFG, hoping that combining the businesses would create efficiencies and return the enlarged business to profitability. Whilst these options were explored, Mr Valentine expressed “significant concerns” about TFG’s business.
TFG then proposed acquiring TGC's business, assets and liabilities, including the responsibility for the schemes. In return, TGC would retain ownership of the property while allowing TFG to occupy it rent-free for two years.
TGC’s directors consulted shareholders, and all expressed “100% support” for a deal that would allow them to retain the property while transferring the business and its liabilities to TFG.
Steve Valentine, Mr Groocock’s son-in-law, led the transaction on behalf of TGC.
During negotiations, concerns were raised by TGC’s advisers that removing the property from the employer covenant would significantly weaken support for the schemes. The directors were advised that appropriate mitigation should be put in place to account for this, potentially through bolstering the covenant with replacement alternative assets.
Despite these concerns, Mr Valentine remained focused on completing the transaction. He described it as "by a country mile the best outcome for our shareholders" and warned that shareholders were "in serious danger of losing everything" if it did not proceed.
He also expressed concern that, in the event of TGC winding up without the transaction proceeding, the property would be used to support the schemes.
Trustee consideration of TFG’s proposal
Mr Valentine had been a trustee of the main scheme since 26 May 2010. He resigned on 19 September 2018 due to the conflict of interest created by the proposed transactions. An independent trustee was subsequently appointed to both schemes.
However, other TGC directors and shareholders remained trustees for both schemes and Mr Valentine continued to attend trustee meetings after his resignation, as a company representative.
Representatives of TFG presented the proposal, to the trustees in October 2018. Mr Valentine attended to answer questions on behalf of TGC. Both the trustee boards expressed support for it, however, they did not obtain independent legal or covenant advice until February 2019, after TGC informed them that heads of terms had already been agreed.
The agreed structure of the transactions was that:
- TGC would transfer its business and assets to a newly incorporated subsidiary, Padders (Kettering) Limited (PKL), while retaining the property
- LNSC would acquire PKL for £1
- responsibility for the schemes would transfer from TGC to PKL via flexible apportionment arrangements (FAAs)
- LNSC would guarantee PKL’s liabilities to the schemes
The guarantee was presented as mitigation for the reduction in covenant support resulting from the loss of the property.
Flexible apportionment arrangements (FAAs)
A key component of the transactions was the use of FAAs.
FAAs were introduced in 2012 to facilitate legitimate corporate activity, such as restructurings and mergers, by allowing an employer to leave a DB pension scheme without triggering an employer debt, provided certain statutory conditions are met.
Before agreeing to an FAA, trustees must be reasonably satisfied that the statutory funding test is met. This requires them to assess the employer covenant and compare the scheme's position before and after the proposed arrangement.
Trustees must be reasonably satisfied that:
- the remaining employer or employers (including the replacement employer(s)) are reasonably likely to be able to fund the scheme for the foreseeable future, and
- the security of members’ accrued benefits is not adversely affected by the arrangement
The trustees concluded that the funding test had been met and approved the FAAs on 15 April 2019. Following shareholder and board approvals, the transactions completed on 8 May 2019.
Post-transactions
PKL experienced immediate liquidity pressures following the transactions and was in serious financial difficulties by the time the COVID-19 pandemic lockdowns started to take effect. PKL’s directors were already considering a pre-pack administration in March 2020.
LNSC’s principal assets were its shares in PKL and TFG. As a result, the value of its guarantee to the schemes depended on the financial performance of those businesses.
Both TGC and TFG had been loss-making before the transactions, making the insolvency of those businesses a foreseeable risk, as had been identified in covenant advice obtained as part of the transactions.
On 9 April 2021, LNSC and its subsidiaries, including PKL, entered insolvent liquidation triggering the schemes’ entry into PPF assessment.
At that time, the main scheme had 136 members, and the Directors Scheme had six members. A combined section 75 debt claim of £3.8 million was recorded in PKL’s statement of affairs.
The schemes recovered £645,460.16 from PKL’s liquidation, equivalent to just 17 pence in the pound. The LNSC guarantee proved to be of no value to the schemes.
In January 2022, TGC sold the property for £3.45 million, generating net proceeds of approximately £3.3 million. Following the completion of the transaction, fees of £125,000 and £25,000 were paid to Steve Valentine and John Bligh respectively.
Around £1 million of the remaining proceeds were distributed to members of the Groocock family and related family trusts in January 2022.
On 28 April 2022, TGC entered a solvent MVL with approximately £2.1 million in cash with a view to winding up the company.
Regulatory action
Our objective was to secure appropriate financial support for the schemes in response to the loss of valuable covenant support and the resulting risk to members and the PPF.
We investigated using our statutory information-gathering powers and publicly available material. Our concerns included that:
- the targets had received significant financial benefits while the schemes suffered material detriment
- Grant Thornton had warned the directors that the transactions could be materially detrimental to the schemes and those concerns were not adequately addressed
- the LNSC guarantee did not adequately replace the covenant security previously provided by the property
- advice received in 2018 indicated that an MVL could have enabled the schemes to be fully funded while still providing returns to shareholders
- the directors were aware of the significant risks associated with combining two loss-making businesses and those risks ultimately materialised
We were not persuaded by the targets’ explanation that the failure of the new employer group could be attributed to the impact of the COVID-19 pandemic.
Our investigation focused on the extent to which the impact of the transactions on the schemes had been given due consideration and whether adequate mitigation had been provided.
In particular, we examined:
- the level of scrutiny applied to the financial prospects of the new employer group
- the assessment of the covenant that would be available to support the schemes following the FAAs
- whether the LNSC guarantee adequately replaced the covenant support previously provided by the property
In April 2025, we issued a Warning Notice to TGC, its directors and shareholders, seeking Contribution Notices totalling £3,358,858 across both schemes, plus an adjustment for the passage of time. The amounts sought from individual targets reflected their degree of involvement in the transactions and the benefits they had received.
The transactions removed valuable covenant support from the schemes and left them exposed to an unmitigated risk of loss if the new employer group became insolvent. Given the weak financial position of the businesses involved at the time, that risk was foreseeable.
We also considered that the transactions generated significant financial benefits for the targets while exposing the schemes to significant increased risk.
Outcome
The targets challenged aspects of our case and made representations in response to the Warning Notice. However, TGC initiated settlement discussions and an agreement was reached with all targets in April 2026.
All payments due under the settlement agreement were made to the schemes by June 2026.
This case highlights the following:
- We will take action where corporate activity materially weakens support for DB schemes. Depending on the circumstances, that may include action against employers, directors, shareholders and other connected parties.
- We are prepared to act in relation to schemes of all sizes.
- Trustee approval of actions, including through an FAA, does not deter us from investigating or taking action where we believe members’ benefits have been placed at risk.
- While we will use the full range of our regulatory powers where necessary, we remain open to negotiated settlements where they are in the best interests of scheme members and the PPF.
Our approach to settlements
Our approach is to strive to achieve the best outcome for members, including through use of our regulatory powers where necessary.
We assess each case on its individual facts and circumstances. Our decisions on interventions are proportionate and risk-based so that we reach an appropriate and timely resolution that protects members.
Where we agree a settlement, the amount and whether to disclose it is determined on a case-by-case basis reflecting any relevant, mitigating or aggravating factors. We consider the time and costs involved in our actions, the circumstances of the scheme, the circumstances of targets of our regulatory action, and the realistic possibility of achieving a better outcome through more protracted enforcement action through the Determinations Panel, Upper Tribunal and the courts.
See our settlement policy for more information about our approach.