More than 100 North West companies hit by BHS collapse
THE collapse of BHS has left more than 100 North West companies owed more than £7m – and they can expect to be paid back little more than £200,000.
The administrators expect a distribution of just 3p in the pound to unsecured trade creditors once £55m has been paid to secured creditors, including £35m to BHS’s former owner Arcadia Group.
There are 14 North West companies owed more than £100,000, including £1.73m owed to Cascade Holdings, £1.1m to Comfy Quilts and £980,000 to Smithy Green Apparel.
A report by administrators Philip Duffy and Ben Wiles of Duff & Phelps detail the claims of the 1,214 trade and expense creditors that have come forward, which are owed £48.54m.
In addition, HMRC is owed £16.3m for unpaid VAT and corporation tax, landlord claims total £357.8m and the pension scheme has a £571m deficit. The remaining one-tenth of the £1.12bn is owed to inter-company creditors.
BHS had 164 retail sites in the UK and Jersey, operated an online store, and supplied products to 67 franchise stores in 16 countries. It directly employed 7,700 staff.
BHS Ltd, which was the group’s principal trading company, lost £69m in the year to August 2014 and management accounts for the 18 months for February 2016 showed a loss of £93m, before interest, tax and exceptionals.
The administrators estimate its bill will reach £3.5m for nearly 10,000 hours work, while law firm DLA Piper is expected to bill £2.3m – the lion’s share of an estimated £2.7m of professional costs.
The scale of those costs are in part because administrators continued to trade the business, hopeful of a going concern sale. However despite various offers for the whole business being received, no deal was possible and an orderly wind down of the retailer was announced on June 2.
Four investigations are underway into the business – by the Insolvency Service into the conduct of the directors, an anti-avoidance investigation by The Pension Regulator, an inquiry by Parliament’s business, innovation and skills committee into the original sale to Retail Acquisitions Ltd (RAL), then the same committee along with Parliament’s work and pensions committee are collecting evidence about the companies’ pension liabilities.
The administrators also have a duty to investigate transactions which they feel were not in the best interests of the company, and it said its preliminary investigations have found a “number of transactions that on the face of it may require investigation”.
BHS’s owner Retail Acquisitions bought the group from Arcadia in March 2015, with Arcadia writing off a £215m inter-company debt and taking a floating charge over a £40m loan.
Trading remained difficult and particularly poor trading at Christmas – when sales were down £25m on 2014 and £18m below budget – increased the pressure on the group.
BHS proposed a company voluntary arrangement (CVA) in March 2016 as it tried to address its problems, particularly around the amount of rent it was paying. Although creditors approved the CVA on March 23, £100m of additional funding was required to support the proposals, which didn’t materialise. One month later the companies were put into administration.