25th Apr 2016 11:40
LONDON (Alliance News) - High street retailer BHS has collapsed into administration, putting 11,000 jobs at risk and threatening the closure of up to 164 stores.
It is the biggest retail failure in the UK since Woolworths went bust in 2008.
In a statement, administrators Duff & Phelps said: "The group (BHS) 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. 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 group will continue to trade as usual whilst the administrators seek to sell it as a going concern," the administrators added.
The company's owner, Dominic Chappell, said he will continue to work with the administrators to "find a solution post the administration". He also said "no-one is to blame" for the collapse.
Speaking to the Press Association, Chappell said: "No-one is to blame. 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."
BHS was bought last year by a consortium called Retail Acquisitions, headed by Chappell, for GBP1 from retail entrepreneur Philip Green, the owner of the Arcadia retail empire.
BHS has debts of more than GBP1.3 billion, including a pension fund deficit of GBP571 million, which proved a major stumbling block in last-ditch rescue talks over the weekend.
Rival retailer Sports Direct International PLC is understood to want to some of BHS's 164 stores, but will only do so if it does not have to take on any pension liabilities.
Green is reported to have offered GBP80 million towards the cost of BHS pensions, though the regulator could still pursue further payment from the retail billionaire.
Green bought BHS for GBP200 million in 2000.
It is thought that, along with Sports Direct, up to 30 other retailers may look to buy either a slimmed-down version of the business out of administration or pick over its store estate.
However, experts warned that it was "unlikely" a buyer for the business in its current form would be found.
Julie Palmer, partner at insolvency firm Begbies Traynor, said: "As an under-performing brand that simply hasn't kept up with the pace of change in the retail sector and requires major investment, it looks increasingly unlikely that any buyer will be brave enough to salvage the business in anything like its current form."
Source: Press Association
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