Administrators to BHS are to close 20 stores next Saturday as hopes of finding a buyer for the failed department store fade.
Stores including Slough, Stirling, Truro, Preston, Stratford-upon-Avon and Yeovil – all leased properties – will shut on 23 July. Stock levels have been running low at the stores since BHS collapsed into administration in April.
Up to 580 staff will be affected by the closures, most of whom are likely to be made redundant, but it is understood that administrators are hoping to redeploy some employees.
The shops are being closed as MPs prepare to write a report on the demise of the retailer, which is likely to criticise heavily its former owners Sir Philip Green and Dominic Chappell.
Green has set out a robust defence of his stewardship of BHS in a letter to MPs, claiming that he invested £421m into the group during his 15 years at the helm. It is clear that we invested substantially in the business,” he said.
The amount of capital investment highlighted by Green during his tenure almost exactly matches the £423m paid in dividends to his family and other BHS shareholders between 2000 and 2004. It is part of the more than £580m, including rental payments and interest, extracted from the company throughout Green’s time in charge.
The collapse of BHS has put 11,000 jobs at risk and left a £571m pension deficit. Green sold BHS for £1 in March 2015 to a consortium led by Chappell, a serial bankrupt. The retailer failed 13 months later.
Al Mana Group, based in Doha, bought BHS’s 70 overseas stores and its online business in June, but it is thought that administrator Duff & Phelps will now be forced to sell off the group’s 164 UK outlets piecemeal.
MPs are hoping to publish their report on BHS within weeks. The Labour MP Frank Field, who chairs the work and pensions select committee, one of the two parliamentary groups investigating BHS, has said Green’s credibility rests on coming up with a generous settlement for pensioners, following a bad-tempered evidence session with the retail tycoon last month.
Green previously admitted mistakes in the handling of the pension fund, but has pledged to “sort it”. When giving evidence to MPs, Green said he had not been sufficiently involved in the fund’s dealings, but letters from the former chair of the BHS pension fund trustees indicate that Green was involved in meetings as early as 2002.
In his letter to MPs, Green said: “It is clear that we invested substantially in the business, we lent substantial sums to the business and we gave Retail Acquisitions [Chappell’s consortium] every chance with a solid platform to take the business forward.”
Letters from Green’s legal advisers, Linklaters, claim that Chappell broke the terms of a sale agreement by failing to invest his own money in BHS, and paying out proceeds from property sales to fund loans, and payments to himself and advisers.
Retail Acquisitions borrowed £5m, secured against BHS’s warehouse in Atherstone, Warwickshire, to provide half of a promised equity investment agreed as part of his deal with Green.
Linklaters wrote to law firm Olswang in June, saying that raising the money against BHS’s Atherstone warehouse was “contrary to the clear commercial understanding” that a £5m upfront investment should be new equity.
Sources close to Green say he is “deeply angry” at Olswang and its role in the scandal.
Evidence from Eddie Parladorio, one of Chappell’s key lieutenants, indicated that Chappell was still trying to raise a personal loan to fund his promised investment in the retailer 48 hours before he agreed a takeover deal.
Parladorio said a loan was agreed with Retail Acquisitions, rather than Chappell personally, at the very last moment.
He also told MPs that he had voted against a plan for Retail Acquisitions to lend £1.5m to the company that owns Chappell’s father’s house, as “I did not consider this loan to be the business of RAL”.
Chappell declined to comment.
