BHS has officially collapsed into administration after failing to agree a last-minute deal to rescue the department store chain.
The demise of the retailer, which employs 11,000 people, is the biggest failure on the UK high street since that of Woolworths in 2008.
Duff & Phelps has been appointed as administrator and will keep stores open as it tries to find a buyer for BHS.
The Pensions Regulator has also confirmed that it is investigating BHS. This would suggest that the regulator is considering whether to force Sir Philip Green, the former owner of the retailer, to contribute towards the company’s £571 million pension deficit.
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. Further announcements will be made as appropriate in due course.”
Duff & Phelps was understood to have had more than 30 expressions of interest in buying BHS by midday yesterday.
Emergency funding
The collapse of BHS presents another problem for the UK government as it attempts to save thousands of jobs in the steel industry. The retailer had failed to secure the emergency funding that it needed to pay wages and rent.
Business secretary Sajid Javid said the government was in talks with BHS management about the retailer’s collapse.
Dominic Chappell, owner of BHS, said in a letter to employees on Sunday: “It is with a deep heart that I have to report, despite a massive effort from the team, we have been unable to secure a funder or a trade sale.”
He indicated in the letter that staff wages for this month would be paid by the administrators.
Chappell led the Retail Acquisitions consortium that bought BHS for £1 last year. However, the retailer has struggled with falling sales, a hefty rent bill and a pensions deficit. – (Guardian service)
