BHS, the 88-year-old department store chain which collapsed into administration in April, is now facing liquidation at the cost of 11,000 jobs after the administrators said they were unable to locate a suitable buyer.
The administrators, Duff & Phelps, had been widely expected to name a new BHS owner today, with a consortium fronted by the UK retail veteran, Greg Tufnell, hotly tipped to take control of the chain.
But in a surprise announcement, Duff & Phelps said it had "not been possible" to agree a sale because the prospective buyers lacked the "working capital" to seal the deal.
"Despite the considerable efforts of the administrators and BHS senior management, it has not been possible to agree a sale of the business” said a statement.
“Although multiple offers were received, none were able to complete a deal due to the working capital required to secure the future of the company".
”Our thoughts today are with the employees. We thank them for their professionalism and hard work. We would also like to thank the great British public for helping us in our efforts to save BHS resulting in several weeks of significant sales."
Sources said the Tufnell consortium, reportedly backed by capital from Portugal, failed to produce the necessary funds.
Three firms - Alteri, Hilco and Gordon Brothers - have been lined up as liquidators of the chain. All of BHS's 163 stores will all be in "close down or sale mode" over the coming weeks.
There are 8,000 members of staff and a further 3,000 non-BHS employees who also work in the stores as cleaners and caterers. All have been told their jobs are "likely to go".
BHS was sold by the "King of Shops" Sir Philip Green, for a nominal £1 in March 2015 to a consortium without retail experience called Retail Acquisitions, led by a former racing driver and bankrupt Dominic Chappell. But the firm collapsed into administration on 25 April when it was unable to secure new loan finance.
Sir Philip said he was "saddened and disappointed" by the liquidation of BHS and "had hoped that the business would be sold as a going concern".
The BHS workers' pension scheme, which has an estimated £571m deficit, is effectively already being backstopped by the Pension Protection Fund, resulting in members facing a 10 per cent cut in payouts.
The Pension Regulator is investigating whether Sir Philip avoided his financial responsibilty to the workers in the scheme when he sold it in 2015 and may call on him to contribute more than £200m of his fortune to help plug the gap.
Two committees of MPs are seprarely investigating the circumstances around the sale and collapse of the chain. Sir Philip is expected to give evidence in person to MPs on 15 June. Mr Chappell is also due to give evidence on 8 June.
The Green family took around £420m in dividends out of BHS between 2000 and 2005.
Up to £30m is also said to have left the company in cash over the past year, under the ownership of Retail Acquisitions, in the form of various fees and expenses.
The chair of the Parliamentary Work and Pensions Committee, Frank Field, has suggested that Sir Philip should be stripped of his knighthood if he fails to pay a substantial amount into the pension scheme. In response, Sir Philip said Mr Field should resign from the commitee as he had shown himself to be prejudiced.
Philip Duffy, managing director of Duff & Phelps said today: “The British high street is changing and in these turbulent times for retailers, BHS has fallen as another victim of the seismic shifts we are seeing. The tireless work and goodwill of the existing management team and employees of BHS with the support of my team were not enough to change the fortunes of the company.”
Others who had shown an interest in buying out part or all of the BHS chain included the Sport Direct owner Mike Ashley, John Hargreaves, the entrepreneur behind Matalan and Poundstretcher boss Aziz Tayub. Philip Day, the chief executive of Edinburgh Wooolen Mill had also expressed an interest before reportedly pulling back.
Administrators have a responsibility to safeguard the interests to creditors of failed firms. If they can extract value for creditors by selling a business as a going concern they will try, but if this proves impossible they proceed to liquidation of assets as a way of raising money.
BHS was founded in Brixton in 1928 by a group of American entrepreneurs. It was acquired by Sir Philip in 2000 for £200m from Storehouse.
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