The High Court in Birmingham has ruled that a 10,000-piece pottery collection housed in the Wedgwood Museum will be made available to pay off creditors seeking funds for a £134m pension shortfall.

In response, the Museum’s administrator, Begbies Traynor, has been in talks with the Heritage Lottery Fund, the Victoria & Albert Museum and members of the Wedgwood family, to raise funds to save the 250-year-old collection.

The Wedgwood Museum, which has an income of around £2.6m, went into administration in April of last year after it was served with a substantial pension debt by the company set up to manage the Wedgwood Group pension plan.

The Museum is in the unfortunate position because of its participation in a multi-employer pension scheme covering a number of employers in the Waterford Wedgwood Group. Five of the Museum’s staff are among the Wedgwood Group pension fund’s 7,000 members.

When the Waterford Wedgwood group fell into administration in 2009, the Museum found itself the last remaining employer in that scheme. Under pension legislation introduced in 2005, it therefore became liable for a pension debt in the region of £134m.

Administrators from Begbies Traynor's Stoke-on-Trent office had sought the High Court ruling in order to determine the future of the collection.

Bob Young and Steve Currie were appointed joint administrators of the Wedgwood Museum Trust in April 2010, and have since been seeking the direction of the court to determine the future of the Museum’s 10,000-piece collection.

Young said: “We made an application to the High Court as we wanted the judge to clarify for us whether the collection is an asset of the company or not, so as to establish whether we can or cannot sell it for the general benefit of creditors. Or whether the assets can remain in trust. The legal advice we obtained was not clear on this point.”

The application was the subject of a three-day hearing in September. Birmingham High Court ruled that the collection was not held in trust.

In talks with funders

Young said that while the administrators must raise money to the value of the collection for distribution to creditors, they would try to do this without selling the collection, perhaps by means of a Creditors’ Voluntary Arrangement over three years, or the sale to benefactors who would allow the collection to remain where it is.

“We are disappointed for the trustees of the Museum who have worked so hard to adduce evidence of the trust status of the collection,” he said.

“This is not necessarily the end of the road for the collection or the museum as we are exploring other options to raise money to keep the collection in-situ.

“We have already held discussions with the Heritage Lottery Fund, the V&A Museum, certain members of the Wedgwood family and other potential benefactors about raising funds.

“The principal creditor, the Pension Protection Fund, has already indicated that it is prepared to consider alternative proposals and allow time for fundraising.

“We will spend the next few months in intensive discussions with potential benefactors and the museum trustees to try to come up with a proposal that is acceptable to creditors.”

He stressed that the company and the collection would remain with the protection of administration for the time being and that there were no immediate plans to close the Museum which continues to be open to the general public.

Last year, the Charity Commission was also asked to provide a view on whether the collection is held in permanent endowment or whether it is part of the charity’s corporate property, which is available to creditors.

It reached the conclusion that the Museum's collection was not protected.

David Davison, director at pensions specialists Spence and Partners, said charities should make sure that their assets are ring-fenced, so there is no chance that pension trustees can pursue them in the event of failure.