Dawson International, one of Britain’s last cashmere manufacturers, is forced into administration due to huge pension liabilities.

The luxury brand’s workforce has fallen from 12,000 to 200 over 140 years with a defined benefit pension fund of around 4,000 retired staff. The firm is unlikely to meet its growing pension liabilities.

The Scottish firm’s shares were suspended yesterday after the actuary of its pension scheme required the company to contribute to the deficit of around £50m, while the company was worth just £700,000 at the time.

Dawson tried to negotiate a deal with the Pension Protection Fund (PPF) but last month the PPF rejected a deal of a 33 per cent stake in the company in return for covering the pension burden. Dawson said it was unlikely to meet its scheduled contributions.

Company chairman David Bolton said: “We believe our proposal provided significantly better guaranteed returns than insolvency and we are surprised by the PPF’s decision.”

He added: “While we would expect a new owner would be found quickly, there remains a real risk that a successful and profitable UK heritage business will suffer from a period of uncertainty.”

Dawson International has two trading divisions, one in the US and the other in the UK which currently comprises of Barrie Knitwear. The group said there was currently no intention to appoint administrators at its American Knitwear business Dawson Forte.

Dawson International last reported revenues of £19.8m in the six months to October 2011, a drop of 8 per cent, and with US sales making up £15m of that figure.

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