BELEAGURED chain store BHS has entered administration and become the biggest retail failure since 2008.
Philip Duffy and Benjamin Wiles, Mmanaging directors at Duff & Phelps have been appointed Joint Administrators of the High Street store with around 11,000 jobs put at risk.
Dominic Chappell, of owners Retail Acquisitions, issued a letter to all its staff to explain that the business will now be put in the hands of administrators having failed to secure a rescue package.
In March 2015, retailer Philip Green announced that he was selling BHS Group Ltd, which he had owned for 15 years – to little-known Retail Acquisitions, itself formed just a few months earlier, for £1.
Sports Direct is believed to have expressed an interest in cherry-picking some of BHS’s 164 stores, but did not want to underwrite its massive pension liabilities, and weekend talks collapsed.
The latest twist comes just weeks after the BHS won a stay of execution after landlords and other creditors agreed to a restructuring plan that dramatically slashed its rent bill.
The High Street chain of department stores – saddled with £1.3bn debts –secured around 95% of creditor backing for its CVA – handled by KPMG – which sought to divide BHS’s 164 store portfolio into three main categories, based on the commercial viability and strategic importance of each site.
Over 75% of creditors had to vote in favour of each CVA to pass the resolutions.
BHS has also transferred its substantial pension liabilities of £571m into the Pension Protection Fund, the government-supported rescue agency.
The retailer’s imminent collapse is the biggest since Woolworths in 2008.
In a statement Duff & Phelps said: “The Group has been undergoing restructuring and, as has been widely reported, the shareholders have been in negotiations to find a buyer for the business. These negotiations have been unsuccessful. In addition property sales have not materialised as expected in both number and value. Consequently, as a result of a lower than expected cash balance, the group is very unlikely to meet all contractual payments. The directors therefore have no alternative but to put the group into administration to protect it for all creditors. The group will continue to trade as usual whilst the Administrators seek to sell it as a going concern.”