Member Article

BHS - Modern living made easy... for some

by John Harlow, Harlow Insolvency

I don’t know if anyone else has noticed it, but there has been quite a lot about the demise of British Home Stores in the media recently?

How could anyone miss it! It’s been everywhere and has probably created more fuss than any of the other headline High Street failures in the last few years, certainly since Woolworths collapsed in 2008. The main difference with the media’s approach to this failure, has been the hounding of the businesses previous owners and the unprecedented intervention of a Committee of MP’s to investigate the failure, despite the fact that formal insolvency proceedings are in place and Insolvency practitioners have been appointed, who also have a statutory duty to investigate the affairs of the company and the conduct of its directors.

There has been a steady stream of High Street business failures over the last few years, with Woolies probably topping the list and culminating (so far) this year with the likes of Austin Reed, My Local and of course, BHS. The High Street is becoming a bit of a waste land, with empty shop windows staring bleakly out in desperate expectation of being filled by yet another charity shop or nail bar. This, of course isn’t a new phenomenon, the advent of internet shopping sounded the death knell years ago and those retailers who didn’t react to the challenge quick enough were doomed. John Lewis is probably a shining example of how it should be done, whilst BHS undoubtedly exemplifies how not to do it.

When the news first hit about the then new owner of BHS, Dominic Chappell, putting forward proposals for a Company Voluntary Arrangement, it was fairly obvious that it was doomed to failure, unless there was a considerable input of fresh capital to fund trading going forward. Who on earth was going to lend the sort of money required at that late stage? The answer was, of course, nobody and the company proceeded rapidly into Administration and the inevitable progressive closure of the stores.

When the news broke, I tried to remember when I had last been in a BHS store and why. The answer was many years ago and I suspect it was to take advantage of what used to be a very good lighting store. Actually, that’s all I ever used to go in there for and I don’t suppose I’m alone in not having been a regular shopper there. This is at the heart of what happened and in all likelihood, BHS was doomed long before Sir Philip Green or Dominic Chappell got their mitts on it.

The truth is that the great British public had fallen out of love with BHS, in much the same way as they did with Woolworths. The wailing and gnashing of teeth at its demise is more from nostalgia for an institution that had been around since 1928 and had become part of the street furniture in most British cities, than for any great sense of loss for what it offered to the consumer.

The furore created by its failure was, quite rightly, down to the loss of 11,000 jobs in one fell swoop, coupled with an enormous pension fund deficit incurred during Sir Philip Green’s tenure. What appears to have been revealed during the production of the Committee’s Report, is that as soon as he could see that matters had gone beyond redemption, Sir Philip decided to drop the whole shebang like a hot potato. The sale to Chappell for just £1 abrogated the whole responsibility onto the latter’s shoulders and enabled him (he hoped) to walk away from the mess he had created.

If BHS was at deaths door in 2015, having been savaged by those responsible for looking after it, the sale to Chappell was effectively the coup de grace. As the shattered remains of BHS lay mortally wounded on the High Streets and Shopping Malls of this country, Dominic Chappell plunged his sword into its heart and ripped out its remaining assets, death was inevitable! It was carried out with such ruthless efficiency that, had BHS been a fox, Chappell would probably have been awarded the ears and tail.

Having said all of this, as an Insolvency Practitioner I am somewhat uneasy about the way the whole affair has been treated. It feels like another knee-jerk reaction designed to appease the popular press. A cynic may feel that it had more to do with the political climate at the time, than a means to either get to the truth of what lay behind the collapse or establish what remedies there may be to assist those worst hit by it, i.e. the creditors, the pension fund and of course the former employees. I am unsure how airing all these matters in public has enhanced the position and whatever you feel about the people involved; it is redolent of a witch hunt.

The Administrators are surely the best people to carry out an investigation of this nature and the public manner in which the Committees have carried out their investigations may have endangered the work which they are bound by statute to undertake. If nothing else it is surely a duplication of effort and at what sort of cost to the public purse?

The Administrators will be concentrating their efforts on investigating all the transactions which have effectively denuded the company of its assets. I have had a look at the Insolvency Act but can nowhere find the removal of a Knighthood as one of the sanctions available against a delinquent director. Whilst such action would undoubtedly hurt Sir Philip Green, it won’t bring back the jobs or restore the hole in the pension fund. Time will tell whether the threat of de-knightification is sufficient to encourage him to dip into those deep trouser pockets to plug that gap.

Both Sir (for the moment) Philip Green and Dominic Chappell certainly have a case to answer and the report being prepared by the Administrators will bring those findings before the relevant authorities. The legality or otherwise of the actions taken by those two will properly be established in the fullness of time. It seems to me that those best suited to the task should be allowed to get on with it.

The BHS strap line was “Modern Living Made Easy”. Ironic, given that I am told that Sir Philip Green is currently enjoying the sun on his £100m yacht. I wonder what it’s called, Yachty McPensionscheme perhaps? One thing’s for sure though, he’ll want to avoid creating a hole in that….

This was posted in Bdaily's Members' News section by Laura Jones .