Philip Green under pressure to help plug pension hole at BHS

Philip Green, the British billionaire and a face of the UK high street, is under pressure from regulators and politicians to help plug a hole in BHS Group Ltd.'s pension fund as the retailer he once owned lurches toward bankruptcy.

The UK’s pensions regulator is considering asking Green to help fill a savings deficit that stood at £571 million last month. The program was fully funded when Green acquired BHS in 2000. He sold the 164-store chain last year for £1 pound.

BHS, a mainstay on U.K. shopping streets for almost nine decades, appointed administrators to protect against insolvency on Monday, putting 11,000 jobs at risk in what would be the industry's biggest collapse since Woolworths Group Plc in 2008.

Green, 64, whose Arcadia Group Plc owns Top Shop, is in the spotlight after BHS paid £420 million in dividends after he bought it. The £571 million hole was revealed by court records and represents the pension liabilities that would be faced by a prospective buyer.

‘Fair Share’

BHS staff and the public will understandably want to know whether the former owner who took so much money out of the business will have to pay his fair share in liabilities that he accrued during his ownership,” Angela Eagle, the opposition Labour Party’s spokeswoman on business issues, said in parliament on Monday. Lawmaker Richard Fuller of the ruling Conservative party said, “If the sale was done on the understanding that it was avoiding a responsibility for pension losses, that one pound he received was equivalent to 30 pieces of silver in his betrayal of the BHS employees and pensioners.”

Green didn't immediately respond to a request for comment. He has offered £80 million to help plug the deficit, the Times newspaper reported last month.If the retailer is liquidated, it will owe another £757 million to landlords, suppliers and other unsecured creditors, the court document shows. The company also owes £124 million to secured creditors including Green's Arcadia Group, Barclays Plc, Gordon Brothers Group and Grovepoint Capital, according to the document.

Employee protection

The pension regulator is seeking to determine whether it would be appropriate to use its anti-avoidance powers, a spokesman said. These include demanding that where there is a deliberate attempt to avoid a statutory debt, individuals pay up to the full amount owed. BHS employees who have paid into the program have been assured they are protected by the UK Pension Protection Fund, which was created in 2004 to guarantee pensions when sponsor companies go bankrupt.

“The PPF will now work with the pensions regulator and other parties to secure the best outcome for the pension schemes,” Malcolm Weir, head of restructuring and insolvency at the PPF, said in an e-mailed statement.