Accusations flying over collapse of retailer
Edinburgh Woollen Mill circles Bhs as Green to face MPs
Philip Day, the entrepreneur behind the Edinburgh Woollen Mill and Peacocks chains, is said to be among a number of parties circling Bhs.
Mr Day is understood to be keen on buying some of the 164 stores from the company which fell into administration with massive debts.
Sir Philip Green, who sold the chain for £1 last year, is likely to appear before a cross-party committee of MPs to face questions over the collapse of the 88-year-old retailer.
The chairman of the Work and Pensions Committee Frank Field confirmed that a decision to call Sir Philip will be taken amid concerns over the size of the company’s pensions deficit.
Sir Philip paid up to half a billion in dividends to his wife soon after acquiring the business in 2000 while the pensions deficit has ballooned to £571 million.
Administrators were called in to troubled Bhs on Monday as a desperate search began for a buyer who could save 11,000 jobs.
The restructuring firm Duff & Phelps were handed the task of finding a future for the business.
Staff were told in a memo from the owner that wages will be paid this month by the administrators, but there was no certainty that any of them would be retained.
It is the biggest high street failure since the collapse of mobile phone retailer Phones4U in September 2014 and Woolworths in 2008.
Recriminations began over who is to blame and who will stump up for the mammoth pensions deficit that lies at the heart of its problems in finding a new owner.
Only last month Bhs secured the backing of creditors who voted to support a company voluntary arrangement and agreed cuts to the rent bill for a number of its stores.
But the company has failed to raise the substantial funding required to keep it afloat and is saddled with a huge pensions deficit which has deterred buyers from coming forward. Talks with Mike Ashley’s Sports Direct broke down.
Topshop tycoon Sir Philip, who bought the chain in 2000 for £200 million, sold the group last March for £1 to Retail Acquisitions, a consortium of businessmen led by Dominic Chappell, who revealed he intends to bid for some of the stores. His potential bid was being greeted with some scepticism by market analysts.
Chappell had earlier hoped to raise £100m partly through the sale of assets, a loan from private equity firm Gordon Brothers, and renegotiation of the rents. It has raised about half the required funds from the sale of its shop on Oxford Street in London and a branch in Sunderland.
Administration would see the pension deficit put in the hands of the government-backed Pension Protection Fund. This would mean healthy funds bailing out Bhs. Green has offered to make a contribution, but critics are demanding he pays more.
A number of individuals are said to have taken millions from the business which was starved of the investment required to keep pace with developments in the sector.
> Daily Business comment: Bhs has suffered a decline similar to that of Woolworths by seeing its proposition squeezed by rivals offering a better product range and shopping experience. In the online age, Bhs’s tired and unloved stores will not attract shoppers. It finds itself with too many stores, too much floorspace and with high costs.
However, its £1.3bn of debt, including its pensions deficit, is the biggest obstacle to finding a buyer. Sir Philip Green has a lot of questions to answer about how he has benefited while the company has struggled.