Why BHS can't find a buyer

A visit to any BHS branch will confirm the retailer has long lost its lustre. Tatty interiors desperate for a makeover, poor quality fashion and a product range that needs a fresh eye at the very least.

By all accounts BHS is a troubled business with little attraction to lure a prospective buyer. An insolvent business with a huge pension deficit and outdated stores are a difficult sell, no matter how attractive the asking price. The most likely scenario is a buyer, perhaps a growing retailer, keen to replace BHS with outlets of its own brand.

The problem lies in the urgency for the administrators to find a buyer, as under the UK's insolvency rules, BHS must find a buyer by mid-June to make a proposal to creditors, otherwise liquidators will be appointed to sell of the company's assets, one by one.

“That would leave the high street looking gap-toothed, just like after Woolworths,” one prominent retailer told the FT, referring to the high street chain that collapsed in 2008. “It took years to put tenants into all those stores.”

Administrators Duff and Phelps want the buyer to take on all of BHS's 164 stores. Were they to ease the criteria, or sell of partial aspects of the business, there would be greater interest from retailers. So far Sports Direct founder Mike Ashley had expressed interest, but has now backed out from making an offer. The net is now being cast to potential foreign investors.

The collapse of BHS is one of the UK's most contentious corporate failures in recent years. The company leaves behind a pension deficit that will be absorbed by an official rescue fund at an estimated cost of 275 million pounds, prompting two parliamentary investigations.