Sir Philip Green is reportedly looking to buy out up to 16,000 members of BHS’s pension scheme as part of his bid to address the deficit.

The Topshop tycoon is working with advisers with a view to buying out members with small pensions, according to the Mail on Sunday.

Last week, Sir Philip Green told MPs he will “sort out” the collapsed department store chain’s pension deficit.

Many owed money from BHS’s pension scheme worked at the chain for only a short period, accruing modest pensions.

Former employees who accept the proposals would get a one-off payment of a couple of thousand pounds, costing Green between £100m and £200m, according to reports.

It has also emerged that Arcadia warned BHS’s pension trustees in 2009 that the chain was being “stripped to the bone” and did not have the funds to plug the pension shortfall.

It has emerged in evidence to the MP-led inquiry into BHS that Paul Coackley, Arcadia’s chief operating officer, had refused to increase the contribution beyond £6.5m.

He told Margaret Downes, then head of BHS’s trustees, that “in short there is currently no free cash flow in the business”.

BHS is being wound down after it collapsed into administration in April and a suitable buyer could not be found.