- Arcadia FD tells MPs he knew Dominic Chappell had been bankrupt
- But Budge said it believed he was surrounded by “competent” people
- Chairman of Taveta, Arcadia parent, said it regarded Retail Acquistion’s business plans as “plausible”
A key lieutenant of Sir Philip Green has admitted he knew Dominic Chappell had been bankrupt prior to BHS being sold to the entrepreneur.
Paul Budge, Arcadia Group’s finance director, told MPs he was aware that Chappell had been insolvent once before the department store chain was sold in March last year to the entrepreneur’s consortium, Retail Acquisitions, for £1.
It has since emerged that Chappell has been bankrupt three times.
Budge admitted it had been “cautious” over Chappell. However he defended the sale of BHS to Retail Acquisitions, arguing that the entrepreneur was not “one man on his own”.
He later added: “We seriously believe he was surrounded by competent people.”
The credibility of Chappell, whose consortium Retail Acquisitions acquired BHS for £1 last year, was probed today in Parliament by MPs during a joint session of the Business and Work and Pensions committee.
Budge said that four weeks of due diligence was done prior to the sale of BHS to Retail Acquisitions being completed.
He said that Arcadia understood that Retail Acquisitions had funding of £120m for BHS. “That was a comfort,” said Budge.
Lord Grabiner, chairman of Arcadia’s parent company, Taveta Investments, said it believed the business plan put forward by Retail Acquisitions was “plausible” and “credible”.
Earlier a senior Goldman Sachs representative said Taveta was told four months prior to BHS being sold to Retail Acquisitions that Chappell had a “history of bankruptcy”.
Anthony Gutman, Goldman Sachs’ co-head of EMEA investment banking, said it also gave indications that the buyer had “no retail experience”.
He added: “We had a view that there were risks attached to the proposal from (Retail Acquisitions).”
Gutman claimed that that initial proposal Goldman Sachs saw from Retail Acquisitions had “no financials” or “business plan” for BHS.
Prior to that, it emerged that Taveta’s effort to restruture BHS’s pension scheme - named Project Thor - had been put on hold as BHS’s managemnt regarded it a “significant distraction” prior to Christmas 2014. Tony Clare, partner at Deloitte, said the scheme would have cost Arcadia “several tens of millions” pounds.
Sir Philip Green is due to give evidence to the inquiry next month.
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BHS: Arcadia exec admits knowledge of Chappell bankruptcy prior to sale