• Sajid Javid orders inquiry into BHS by Insolvency Service
  • Government’s move is rare – usually administrators report on conduct of directors
  • Directors can be disqualified for 15 years if any wrongdoing is proven
  • Inquiry is not focused on one particular individual and will instead look at all evidence

The government has launched an inquiry into the collapse of BHS, investigating the conduct of all directors involved in the retailer’s demise.

Business secretary Sajid Javid revealed during regular House of Commons business questions that he was asking 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 has opted to bypass this process due to the nature of BHS’s fall from grace. He instructed the Insolvency Service to fast-track its investigation. 

The investigation will look at the roles and conduct of all current and former directors and owners involved in BHS in recent years and at the Pension Protection Fund. If any are found guilty of wrongdoing, The Insolvency Service can disqualify them from running a company for 15 years.

A Bis spokesperson said that Javid would “specifically consider the extent to which the conduct of the directors of BHS led to its insolvency”.

MPs have already launched two other inquiries into BHS. The Department for Business, Innovation & Skills and the Work & Pensions Committee launched separate investigations last week.

Javid said: “This investigation will look at the conduct of the directors at the time of insolvency and any individuals who were previously directors. Any issues of misconduct will be taken very seriously.

“Should the investigation conclude that one or more present or former directors have been involved in any misconduct, an application may be made to a court to ask that they be disqualified from acting as a director for a period between two and 15 years depending on the nature of their misconduct.

“Where conduct for which a person was disqualified took place subsequent to 1 October, 2015, and caused a loss to creditors, an application could also be made to a court for an order that compensation be made for losses incurred.”

BHS formally entered administration last Monday, just days after Retail Week revealed that the beleaguered department store chain was on the brink of collapse.

Between 2000 and March 2015, BHS was run by Arcadia tycoon Sir Philip Green and owned by his wife Tina. 

The Greens then sold it to unknown entity Retail Acquisitions, headed by former racing driver and twice insolvent Dominic Chappell, lawyer Eddie Parladorio and financial advisers Keith Smith and Lennart Henningson.

Green has already agreed to attend the inquiry, and will appear on 15 June.

The 88-year-old business agreed a CVA (company voluntary arrangement) with landlords in March as it slashed rents in a bid to stay afloat, but it tumbled into administration last month.

Other retailers, including B&M and Edinburgh Woollen Mill, are thought to be circling parcels of its 164 stores, but administrator Duff & Phelps has hired property agency Savills as it steps up attempts to sell BHS as a going concern.