Time ran out for BHS
8 June 2016 by Thomas Utting
It was announced last week department store BHS has been unsuccessful in finding a buyer and will now be going into liquidation, causing a staggering 11,000 jobs to be lost. The owner of BHS, Dominic Chappell, is being blamed for the collapse and will be giving evidence to MPs today about his management of the company.
BHS entered into administration back in April as the retailer continued to struggle even after negotiating a deal with landlords to reduce rent payments by up to 75% in some stores. Now it appears that the administrators have failed to find an appropriate buyer for the company, leading to the company being wound up.
Now that the chain is set to disappear, Dominic Chappell is coming under fire for his handling of the business. Chappell, who has been made bankrupt himself three times, purchased the BHS chain through his company, Retail Acquisitions, in March 2015 for the bargain price of £1.
However, Chappell may now be asking himself whether that was in fact a good deal, as he is now receiving heavy criticism of his management of the company. It is claimed that Retail Acquisitions did not inspire confidence from suppliers or credit insurers and that they were never a suitable buyer for the chain. It is further claimed that this lack of confidence made it difficult to raise finance and that this lead to BHS suffering severe cash flow problems and ultimately, the collapse of the chain.
To make matters worse for Chappell a parliamentary inquiry has also begun, spearheaded by MP Iain Wright, chairman of the Business committee. Part of this inquiry will involve Chappell himself facing questions from MPs as to the collapse of the chain. The inquiry will also examine the steps taken by Arcadia Group when selling to Retail Acquisitions to ensure that they were an appropriate owner.
If you are concerned about the future of your business and are looking for advice on the legal issues that arise at the onset of insolvency, contact our Corporate Commercial department on 01245 584515 or [email protected]
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