A court judgement delivered today has shed light on the millions of pounds extracted from BHS by its former owner Dominic Chappell, the serial bankrupt who bought the retailer for £1.
Chappell bought BHS from Sir Philip Green through Retail Acquisitions (RAL), and now that the entity has been declared insolvent, liquidators can move in on the money Chappell extracted from the ailing retailer.
The ruling shows that, after incorporating, RAL took out a loan of £6.2m from BHS, and that shortly after buying BHS, it took £2.8m from the retailer. This sum was then handed to RAL directors, or companies owned by the directors.
Separately, RAL took out a loan of £3.5m from Green's retail group Arcadia.
Chappell was paying back the money it owed to BHS in quarterly instalments of £100,000, but was unable to keep up the payments. Duff & Phelps, the firm acting as BHS administrators, have sought for a court ruling to put RAL into liquidation so the money can be reclaimed for BHS' creditors.
Lance Ashworth QC, an insolvency specialist at Serle Court Chambers, said: "The appointment of a liquidator will result in a closer scrutiny of RAL's current, and previous, asset position and dealings.
"No doubt the liquidator will seek to establish precisely what occurred within RAL following its acquisition of BHS, and what became of the monies RAL received from BHS. In the event the liquidator finds monies to have been paid out improperly he has powers to recover them – in particular from related persons such as Mr Chappell."
Chappell has been fighting the claims that his firm is insolvent for months - the claim that was first made in court in October. But the registrar in the High Court said that RAL's working capital had dried up and it was overstating the value of its assets.
In particular, the registrar was doubtful about an £8.5m claim RAL held against Green over the sale of the BHS HQ, Marylebone House. The registrar ascribed a value of just £1 to the claim.