End of an era: thousands of jobs to go at BHS stores to close as administrators call time on sale

 
Helen Cahill
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BHS To Go Into Administration
BHS went into liquidation today (Source: Getty)

BHS is being wound down today after administrators revealed no deal was found to rescue the store, likely putting 11,000 staff out of work.

In a statement this afternoon, administrators Duff & Phelps said it had "not been possible to agree a sale of the business".

BHS is now being “wound down” because no buyer would take on the retailer as a going concern. As well as 8,000 BHS employees losing their jobs, there will likely be job losses for 3,000 non-BHS employees working in the stores.

The administrators are now looking for buyers for the brand and 164 BHS stores. The stores could be sold in groups, and while the administrators handle this process, stock is being sold.

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The administrators added: "Despite the considerable efforts of the administrators and BHS senior management it has not been possible to agree a sale of the business. Although multiple offers were received, none were able to complete a deal due the working capital required to secure the future of the company.

"Our thoughts today are with the employees. We thank them for their professionalism and hard work. We would also like to thank the great British public for helping us in our efforts to save BHS resulting in several weeks of significant sales."

Hilco Capital has been appointed by the BHS administrators, Duff & Phelps, to assist in the operation of the stores, and to provide support at the BHS head office.

Read more: Private equity guru Jon Moulton considered buying BHS and Austin Reed

A spokesman for Sir Philip Green said he is "saddened and disappointed" by the news. Sir Philip Green is set to appear before the a select committee inquiry into the sale of BHS to Retail Acquisitions for £1 in the coming weeks.

How the politicians reacted

Business Minister Anna Soubry said: "Today’s 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.

Read more: The most important reactions to the BHS liquidation

"The Business Secretary has already announced an accelerated Insolvency Service investigation into the activity of former BHS directors. Any issues of misconduct will be taken extremely seriously."

Speaking to City A.M. about the BHS pension scheme, Frank Field, chair of the work and pensions committee, said: "It means the pension scheme nobody owns it, nobody's responsible for it,it is drifting loose and there are 11,000 people who have worked loyally, most of them in BHS, who must be worrying whether they're going to have a job tomorrow.

"It's appalling and a tragic outcome given the amount of money that BHS has generated and actually has been taken out of the company."

What's next for the workers?

Uncertainty over the BHS pension scheme is set to continue, as entry into the Pension Protection Fund (PPF) is not automatic.

Kate Smith, Head of Pensions at Aegon, said: "Despite it being well-known that the BHS Scheme is underfunded, there is no automatic entry into the PPF club. The PPF has a lengthy robust assessment period to investigate whether the scheme has sufficient assets to pay its benefits at the PPF level. It’s only when this assessment has been finalised, which can take up to a year, that a scheme is finally allowed to enter the PPF.

Smith said that as soon as the scheme falls into the assessment stage, members and pensioners pensions will be governed by PPF rules, although trustees will still be responsible for paying benefits. Members’ pensions will be capped, then cut by 10 per cent. Only pensioners who have passed the scheme’s normal retirement date will receive full pensions.

Read more: BHS inquiries have "prompted more questions than answers"

The Insolvency Service has made special provisions for the BHS workers who have lost their jobs; they may be entitled to redundancy payments from the government's National Insurance Fund. These payments then become a debt to the administration. The service hopes to pay 95 per cent of eligible claims within six weeks of receiving an application.

Bill Esterson, shadow minister for business, innovation and skills, said: "The government should act fast to ensure the staff affects are able to find a new job. The closure of BHS and Austin Reed risks having a knock-on impact on the supply chain and other local businesses."

Why BHS was struggling

Philip Duffy, managing director of Duff & Phelps and joint administrator, said: "The British high street is changing and in these turbulent times for retailers, BHS has fallen as another victim of the seismic shifts we are seeing. The tireless work and goodwill of the existing management team and employees of BHS with the support of my team were not enough to change the fortunes of the company."

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Jonathan De Mello, head of retail consultancy at Harper Dennis Hobbs, said: "Hard decisions were needed when Retail Acquisitions bought the business from Sir Philip Green, but too little was done, too late. In my opinion, nothing could have been done to save the business short of a complete rebrand and overhaul of every aspect of trading – from the type of products sold to the design; essentially starting again from scratch."

Neil Saunders, managing director at Conlumino, tweeted:

What's next for BHS' assets?

Edward Cooke, acting chief executive at the British Council of Shopping Centres (BCSC), said: "Now that administrators have been instructed to sell BHS’ stores, I think we will see a lot of interest from a range of retail occupiers as well as leisure operators and even possibly conversion to residential in some cases.

"At the same time there is a lot of optimism from property companies given the asset management opportunities presented by BHS stores which are typically larger than average."

Damian Sumner, head of retail agency at JLL, said: "We will now see a scramble from discount retailers to get hold of a large majority of the stores, with the weakest stores closing immediately. Given this has been on the cards for a while, in many cases the liquidator might seek to put interested parties on a licence immediately."

De Mello said the buyers for the stores may well be more discount food retailers.

He said: "The food consent Sir Philip Green had secured on many of the units will make the majority of them attractive to discounters such as Aldi and Lidl, who are both looking to rapidly expand their store portfolios in as short a time as possible."

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