Last week, Frank Field, chair of the Work and Pensions committee, said that the two inquiries launched to unmuddy the waters surrounding BHS’ collapse into administration in April had so far left them with more questions than answers.
With both Retail Acquisitions’ largest shareholder Dominic Chappell and Arcadia bigwig Sir Philip Green preparing to tell their side of the story in June, it’s clear there’s a lot more information to come.
However, here’s six things we’ve learnt about the BHS’ administration woes so far:
The collapse could have happened even quicker if Retail Acquisitions hadn’t snapped up BHS when it did…
Although the £1 sale of BHS last year raised some eyebrows, advisers working on the deal explained that it was critical to give the high street retailer a shot at survival. While there’s no way of knowing for certain what may have happened had the sale not gone ahead, Mark Byers, partner at accountancy firm Grant Thornton, told the committees last week that BHS needed to renegotiate its leases urgently but being part of the Arcadia group made it tricky for the company to convince landlords that it was not in the position to fork out the current prices on the contracts. “Clearly that indication is less believable when it's part of a larger group,” Byers said.
…but it’s still not totally clear why Retail Acquisitions was picked as a buyer
When MPs posed this question to a handful of the advisers, the room filled with an uncomfortable silence.
People saw Chappell as an ambitious chap….
Speaking at the same evidence session as Byers, Andrew Frangos, chief executive of Cornhill Capital, explained that, while he initially had a good relationship with Chappell, his lack of retail industry experience lead him to describe his plans to buy up a number of notable brands in the sector as “ambitious”.
…and some of them also knew he was a bankrupt
Although not all of the advisers working on Project BHS were aware of Chappell’s previous issues with cash, some definitely were. Goldman Sachs banker Anthony Gutman, who offered Arcadia Group informal advice on the sale, told MPs last Monday that he had warned the company’s finance director of Chappell’s past bankruptcies.
People had their concerns about the BHS pension provisions as far back as 2012…
At the first evidence session in the series, representatives for the Pension Protection Fund explained that they had had their concerns about the sustainability of the pension fund back in 2012. In the same evidence session, representatives from the Pensions Regulator said that they had opened a case into the retailer’s pension scheme to investigate the “atypical” 23-year timeline of a recovery plan they had received in 2013.
…but Retail Acquisitions wasn’t among them
According to evidence given by Chris Martin, chair of the BHS Pension Fund Trustees, the black hole in the pension scheme did not top the list of priorities on Retail Acquisitions’ due diligence checklist. In an evidence session last Wednesday, Martin said that, although the retailer’s future buyers seemed “confident” when he met them and he said little else to cast doubt on the thoroughness of the due diligence process, he added that they "clearly [had] some uncertainty around the pension issues".