Dominic Chappell, owner of the British Home Stores chain, has now announced that the company is set to enter into administration, placing around 11,000 jobs at risk.
The retailer has been struggling to survive for some time and went so far as holding a company voluntary arrangement last month. This is an informal meeting between all the company’s creditors where a strategy for saving the company can be developed. At this meeting, the BHS chain was given a brief reprieve when landlords agreed to reduce their rent by as much as 75% at 87 shops.
Unfortunately, another £100m was needed in order to continue trading but, despite investigating property sales, considering private equity loans and re-negotiating contracts, it appears that BHS was unsuccessful in trying to source these funds. There were also talks to sell off some of the BHS stores to Sports Direct which initially looked promising, but even this appears to now have fallen through.
These events culminated in a letter from Chappell to employees stating that the company is now facing administration. This will involve an independent insolvency practitioner being appointed to run the company with the ultimate goal of selling the business as a going concern, or at least achieving a better result for creditors than if the company were to be wound up.
The fall of BHS is generally being attributed to its failure to keep up with the times and allowing competitors to get ahead. A lack of focus upon online sales and mobile browsing has lead to the chain being viewed as outdated by the general public and, sadly, BHS now look set to go the same way as Woolworths.
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