BHS goes into administration after Sports Direct talks fail

UK retailer BHS was placed in administration on Monday, putting almost 11,000 jobs at risk.

Administrators Duff & Phelps said they will try to sell BHS as a going concern, with stores trading as usual and staff remain in roles, for now.

"The group has been undergoing restructuring and, as has been widely reported, the shareholders have been in negotiations to find a buyer for the business. These negotiations have been unsuccessful. In addition property sales have not materialised as expected in both number and value," the administrators said in a statement put out at 1230 BST.

"Consequently, as a result of a lower than expected cash balance, the group is very unlikely to meet all contractual payments. The directors therefore have no alternative but to put the group into administration to protect it for all creditors."

The company, sold by Arcadia owner Philip Green last year to the opaque Retail Acquisitions for £1, has debts of £1.3bn including a pension deficit of £571m. It had been seen as a High Street anachronism that failed to keep up with its competitors in an age of online shopping.

Discount retailer Sports Direct had been in talks over the weekend with Retail Acquisitions to buy some of BHS's 164 stores, but these proved unsuccessful.

BHS owner Dominic Chappell said no-one was to blame for the failure of the business.

“It was a combination of bad trading and not being able to raise enough money from the property portfolio. In the end, we just couldn't reach an agreement with Arcadia over pensions," he told the Press Association.

He added that he will continue to work with the administrators Duff & Phelps to "find a solution post the administration".
Green has allegedly offered to contribute £80m to the Pension Protection Fund, set up to meet some of the shortfalls in occupational schemes of companies that go bust. It is believed the fund may ask for more from the billionaire, who bought BHS for £200m in 2000.

Retail consultants Retail Remedy said BHS had been “well off the pace” when it came to keeping up with customer trends.

“We are not talking about the last two years, we are talking about a decade ago, within Phillip Green’s ownership. BHS dragged their feet over going online, which left them playing catch up with their competitors, Debenhams and Next,” Retail Remedy said.

“But then the offer that they had to put online was not a leading offer, and their customers were not early adopters of ecommerce. Simply put BHS did not adapt.”

Not a great deal is known about the businessmen behind Retail Acquisitions. The BBC reported on Monday that the company had taken £8m out of the business not long after its purchase from Green.

The company was set up in November 2014, according to its Companies House filing, and was formerly known as Swiss Rock Ventures.

The four company officers are listed as Dominic Chappell, Edward Paladorio and Aiden Treacy.

Chappell is the majority owner. A former racing driver, he has been made bankrupt twice and entered into an individual voluntary arrangement once. His Island Harbour Holdings business, operating a marina and restaurant on the Isle of Wight, went into administration several years ago.

Gary Hobbs, senior equity analyst at Investec Wealth & Investment, said: “Whilst conditions on the High Street have been tough, as witnessed by the likes of Next, we suspect that the travails at BHS are as much a function of their financial position as they are a reflection of slower trading. We do not envisage any material ramifications elsewhere for retailers, though there might be some work to do for the landlords of BHS’ store portfolio.”