Goldman Sachs warned new BHS boss had been bankrupt

The BHS MP inquiry has taken an interesting turn, with investment bank Goldman Sachs confirming they told at least one of Sir Philip Green’s closest associates that the buyer of failed UK department store retailer BHS, Dominic Chappell, had been declared bankrupt.

A top executive at Green’s Arcadia Group knew Chappell had a “history of bankruptcies and a lack of retail expertise” four months before selling the chain to him, a joint cross-party Commons committee was told Monday.

Despite that, the sale of loss-making BHS for just 1 pound went ahead in March 2015.

Anthony Gutman, one of the bank’s most senior London-based lawyers, told the committee that he had not been mandated to provide advice and the bank had turned down an advisory role on the sale of BHS because it was “too small” of a deal.

Gutman said that knowing of Chappell’s personal insolvencies was not enough of a red flag to recommend that Arcadia should “run for its life”.

"There are risks in every situation."

“In every situation there are risks, and these risks need to be assessed and considered in the round…it is not unusual at that stage of proposal to be light on detail”, Gutman said.

Budge said that he was satisfied that Chappell had surrounded himself with a reputable board and had a plan and willingness to revive the business. Arcadia said that it had four suitors for BHS but only two wanted the whole company.

“We wanted this to be a thriving business. We seriously believed Dominic Chappell was surrounded by credible people.” Budge also said BHS was sold to Retail Acquisitions with 70 million of cash and a 25 million credit facility with HSBC guaranteed by Arcadia.

Members of the Business, Innovation and Skills and Work and Pensions Select Committee are questioning all those involved in the collapse of BHS and will question BHS’s pension trustees today.

While the inquiry is ongoing administrators at Duff & Phelps are racing to announce a rescue deal for BHS by Wednesday.