THE new owners of BHS have suffered a setback in their attempts to turnaround the struggling department store after rumours surfaced that suppliers had credit insurance withheld or slashed.
Suppliers have allegedly had their cover reduced or withheld by credit insurers since Retail Acquisitions, a consortium of financiers, lawyers and accountants bought BHS for £1 from Sir Phillip Green last month amid concerns about the new owners’ plans, according to reports.
Credit insurance is vital for retailers as it protects suppliers in cases where the retailer runs into financial trouble and fails to pay its bill.
The new owners are in talks with credit insurers and are attempting to reassure them about their plans for the department store, The Telegraph reported. A source close to the credit insurers told the paper they wanted to know more about the new owners’ plans. “You don’t let someone drive around in a new car without buying it first,” they said.
In a statement, BHS said: “This is an issue affecting some suppliers since January. After talking through our business plan with insurers, including EBITDA [earnings before interest, tax, depreciation and amortisation], the situation is improving and has not stopped us placing or receiving orders.”
BHS is looking for a new finance director and chairman.