MPs launch inquiries surrounding BHS's collapse into administration

MPs have launched their inquiries into the collapse of British Home Stores (BHS) and the reasons linked to the department store group pension fund deficit, whilst calling Sir Philip Green to give evidence on the matter.

The first inquiry, launched by the Work Pension Committee, is linked to the Pension Protection Fund, the government’s pensions regulator and the industry-back pensions safety net. A second inquiry, instigated by the Business, Innovation and Skills Committee late last week, concerns the acquisition and sale of BHS, the retailer previously owned by Sir Green. The inquiry aims to examine all the steps taken by Sir Green’s Arcadia Group to ensure that “Retail Acquisitions Limited was a responsible owner.”

Sir Philip Green and Lady Green asked to give evidence on BHS collapse into administration

Both the Work Pensions Committee and the Business, Innovation and Skills Committee submitted a letter to Sir Philip Green, asking him to appear in person to give oral evidence for the two inquiries. The letter was published online on the Work and Pensions Committee website and signed by the chairs of both committees. In the letter, the Committees revealed plans to hold a joint session in Westminster over the next few weeks, although a date has yet to be planned.

Business Committee chair, Iain Wright, noted in a statement that the fall of BHS brings “misery and uncertainty for thousands of workers,” whilst also placing a “potentially significant burden on the taxpayer in the form of pension liabilities.” He stressed that the “sale and acquisition of BHS raises real questions about whether directors acted in the best long-term interests of the company and their employees. Is there too much of an incentive in the system for owners to asset-strip, take out vast sums for personal gain, and then dump and run leaving the taxpayer to pick up the tab when the company fails, rather than create value for the long-term?”

“In this inquiry we’ll want to question the role of advisers – the lawyers, bankers, auditors and others who advised on the sale and purchase of BHS – and examine the legal obligations of company directors in this process.” In addition to calling on Sir Green to give evidence, both committees intend on inviting his wife and owner of Arcadia Group, Lady Green to give evidence, as well as BHS current owner Dominic Chappell. Chappell, the majority shareholder of parent company Retail Acquisitions, purchased BHS for 1 pound from Sir Green last year, taking on its 571 million pound pension deficit. On Wednesday Chappell revealed that he was preparing to a bid to purchase BHS out of administration. He revealed to the BBC that the appointed administrators had been informed and discussions with US-based investors were at a "mature" point.

BHS collapsed into administration, a form of creditor protection, last Monday, putting 11,000 jobs at risk. At the time the group went into administration, it was understood than Retail Acquisition was in discussion with billionaire Mike Ashley for the potential sale of the chain. However, although talks were understood to have fallen through at the time, it seems as if Sports Direct owner Ashley still has his sights set on the department store group. “Any continuing interest that we have in BHS would be on the basis that we would anticipate that there would not be any job losses, including jobs at head office, and that all stores would remain open,” said Ashley to the Sunday Times.

Since being placed into administration by Retail Acquisitions, appointed administrators Duff & Phelps have received over 50 expressions of interest in taking over part or the whole business. “Over the last few days we have been working hard to stabilise the business and are pleased to have received a number of expressions of interest,” said Philip Duffy, Joint Administrator of BHS, Duff & Phelps. “We continue to seek a sale as a going concern. We appreciate the hard work of staff that have ensured that stores have continued to trade as normal.”

“Staff have been paid over the course of yesterday and today and we want to reassure them that they will continue to be so whilst the Group remains in administration, as a priority payment.”

Images: BHS Facebook and wikimedia