Apr 25, 2016
Retailer BHS goes into administration with 11,000 jobs at risk
Apr 25, 2016
British department stores group BHS collapsed into administration on Monday, putting the 88-year-old retailer in danger of disappearing from the high street and placing 11,000 jobs at risk.
Loss-making BHS employs about 8,000 people, while a further 3,000 contractors work with the company's 164 stores. Going into administration, a form of creditor protection, means it is Britain's most high profile retail casualty since Phones4U in September 2014.
Philip Duffy and Benjamin Wiles, managing directors of Duff & Phelps, have been appointed joint administrators, the restructuring firm said.
"The group will continue to trade as usual whilst the administrators seek to sell it as a going concern," it said.
BHS has been hit by the rapid growth of discount retailers such as Primark, supermarket groups and online sales of both clothing and homewares. The firm had in March won the support of its creditors for a rescue plan that gave it big cuts to its rent bill.
However, saddled with over 1 billion pounds ($1.4 billion) of debt, including a 571 million-pound deficit in its pension schemes, BHS failed to raise the additional funds it required, particularly from planned asset sales, to meet all its contractual payments, prompting the administration process.
Last-gasp talks over the weekend with Sports Direct, Britain's biggest sportswear retailer, to engineer another rescue failed.
BHS was acquired for one pound in March 2015 by Retail Acquisitions, a collection of little known investors, from billionaire Topshop owner Philip Green.
Green had bought it for 200 million pounds in 2000.
Administration means BHS's pension fund will likely have to be bailed out by the government-backed Pension Protection Fund (PPF). That could mean that members lose a proportion of their income.
The pension scheme of Woolworths, the variety store retailer that went into administration in 2008, also had recourse to the fund in 2012.
Green has been criticised for offloading BHS without making a sizeable contribution to its pension deficit. He has reportedly offered the Pensions Regulator 80 million pounds.
A spokesman for the regulator said it had started an investigation into the situation but warned this can sometimes take a considerable amount of time to complete.
Business minister Anna Soubry will make a statement on the BHS crisis to parliament later on Monday.
The government is already trying to prevent the loss of thousands of jobs in the steel sector.
Analysts see little prospect of a buyer emerging, given the difficulty Green had in finding suitors.
They say the most likely scenario is that BHS's assets will be sold off piecemeal. That will likely mean the BHS name, like Woolworths and Comet before it, disappearing from Britain's shopping districts.
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