As inquiries continue into the retailer BHS – focusing on its sale last year and its large pension fund deficit – its administrators, Philip Duffy and Benjamin Wiles, managing directors at Duff & Phelps, announced that it had been unable to find a buyer for the business and it would be wound down and its 163 stores would close. It is estimated around 11,000 people will lose their jobs as part of the closure of the business.
MP Frank Field who chairs the House of Parliament’s work and pensions select committee which is conducting one of the two parliamentary inquiries, told the BBC, “It is an appalling outcome for the 11,000 people who now must be even more worried about their jobs. It also means that for those who are in the pension scheme or who hoped at some stage to go into the pension scheme there is effectively no owner of the pension scheme so their future look pretty rough as well. And yet we know from our committee hearings that there are some people who have managed to walk away from BHS with huge, huge sums of money. The contrast with how well they’ve done and how well the pensioners and the workforce must now feel is of extreme contrast.”
The work and pensions select committee recently held a joint hearing with the business, skills and innovation committee which questioned those who advised on the deal last year which led to Sir Philip Green selling the business for £1 to the Retail Acquisitions Limited (RAL) consortium led by Dominic Chappell who had no retail experience and had been previously been made bankrupt. There will be further hearings in the coming weeks which will include the questioning of Chappell and Green.
Iain Wright MP, Chair of the Business, Innovation and Skills (BIS) Committee said, “Sir Philip Green & Arcadia knew, via Goldman Sachs, of Dominic Chappell’s bankruptcies and his lack of retail experience. We heard that they would have been aware of this four months before the deal was finally done and yet they went ahead and sold BHS to Chappell’s RAL consortium.”
Speaking on BBC Radio 4’s Today programme Simon Walker Director General of the Institute of Directors said he could not defend the way BHS had been run, “I think it has the potential to be deeply damaging to the reputation of British business as a whole. We spend a lot of time agonising about the loss of trust in the business community and I think we can see this is why. Sir Philip Green is a very high-profile business leader. He’s the person on the front page with Kate Moss on his arm who has a £100 million super-yacht and so on – when someone likes this ends up behaving like this people think that is how business is and it is not.”
Walker said that Green still had moral responsibilities towards the business. Lord Myners, a former City Minister and chairman of Marks and Spencers, speaking later in the programme agreed that Green should take responsibility for his actions especially in selling the business to Chappell which he said was “like giving the keys of your car to a five-year-old and allowing the five-year old to crash the car.”
Dave Gill national officer at these shopworkers union, Usdaw, said, “This news is a devastating blow for the staff and the shock waves will be felt on high streets throughout the country. There are some very serious questions that need to be answered, by former owners of the business, about how a company with decades of history and experience in retail has now come to this very sorry end.
“We believe the Government has also got to take a hard look at the process of administration. Currently the law requires administrators to liquidate a company if they believe that secures the best return for creditors, regardless of whether there is an option to keep the business going and secure jobs. Now that decision has been made for BHS, we urge the administrators to comply with the law on consultation and not force the staff to seek a protective award which can result in taxpayers picking up the bill.”
Reacting to the news of the retailer’s demise, the UK government’s Business Minister Anna Soubry said, the “announcement that the administrators have been unable to find a buyer for the business will be devastating news for all those who work at BHS and those in the supply chain. The government stands ready to support workers to find new jobs as quickly as possible.”
The Business Secretary Savid Javed had previously announced an accelerated Insolvency Service investigation into the activity of former BHS directors following the business going into administration in April. Any issues of misconduct will be taken extremely seriously, the government has said.
Last Updated: 5 June 2016