BHS to be wound down as rescue effort falls apart

Of the 11,000 BHS employees, 8,000 are likely to lose their jobs while another 3,000 jobs are “at risk”.

Administrator Duff & Phelps said in a statement that all efforts would be made to sell the 163 stores.

Joint administrator Philip Duffy said: “The British high street is changing and in these turbulent times for retailers, BHS has fallen as another victim of the seismic shifts we are seeing.

“The tireless work and goodwill of the existing management team and employees of BHS with the support of my team were not enough to change the fortunes of the company.”

Duff & Phelps has appointed Hilco Capital to help in the meantime with the operation of BHS’s 164-strong store estate.

A statement from Hilco said it would will assist ”in extending the viable trading period of the store network in order to allow administrators the opportunity to realise maximum returns for creditors”.

Hilco chief executive Paul McGowan said the business would “work alongside” Duff & Phelps “in this complex situation”.

No buyer

The 88-year-old department store chain collapsed into administration over a month ago, as revealed by Retail Week.

This came just one year after being sold by Arcadia owner Sir Philip Green to a little-known consortium of lawyers and financers, Retail Acquisitions, led by former racing car driver and three-times bankrupt Dominic Chappell.

Since going into administration, BHS has reportedly attracted a number of high-profile potential buyers, including Sports Direct boss Mike Ashley, Edinburgh Woollen Mill chief Philip Day and a consortium comprised of Select Fashions boss Cafer Mahiroglu and former Matalan boss John Hargreaves.

Chappell claimed that he would buy back the chain, and that he was in talks with US investors to enable him to do so.

However, all these and other bidders fell away during a lengthy administration process, and administrator Duff & Phelps was left trying to secure a buyer for the chain.

Richess Group entered the fray relatively late in the game, emerging as the front-running contender just one week ago, although it was registered at Companies House on May 12.

The struggling department store chain was known to have run into financial trouble previous to it entering administration. In March it launched a CVA (Company Voluntary Arrangement) in an attempt to bring down its rents.

From CVA to MPs’ inquiry

The CVA was voted through by landlords with a 95% majority on March 23. Just one month later, on April 25, it formally entered administration.

The administration of BHS has run concurrently to several MP-led investigations, still ongoing, which have looked into the circumstances in which BHS hit the buffers.

So far, a joint inquiry by the Business, Innovation & Skills Committee and the Work and Pensions Committee has heard from the business’s legal and accounting advisers and the heads of the Pension Protection Fund and the Pensions Regulator.

The Pension Protection Fund has taken on responsibility for BHS’s £571m pension black hole, while the Pensions Regulator’s role in BHS’s demise has come under criticism from MPs. The BHS pension scheme has 20,000 members, 11,000 of whom are current employees.

BHS chief executive Darren Topp, owners Retail Acquisition and former boss Sir Philip Green are among the witnesses still to appear before MPs.

Business secretary Sajid Javid has also asked the Insolvency Service to investigate BHS’s plight.

Usually, administrators report on directors’ conduct in their final report, given three months after a company enters administration. They then pass their suggestions on whether to investigate directors to the Insolvency Service, an independent government body.

But Javid opted to bypass this process due to the nature of BHS’s fall from grace, instructing the Insolvency Service to fast-track its investigation.