The Business Secretary Sajid Javid has ordered the Insolvency Service to launch a “fast-track” investigation into the collapse of the ailing retail chain BHS, heaping more pressure on the Topshop tycoon Sir Philip Green.
In a clear reference to Sir Philip, Mr Javid yesterday stressed the investigation would look at not only the conduct of the directors at the moment BHS went under last week but also “any individuals who were previously directors”.
The Business Department also said that if any present or former director is found guilty of misconduct a court application could be lodged to disqualify them from acting in such a capacity for between two and fifteen years.
Sir Philip sold BHS for a nominal £1 fee to a consortium with no retail experience called Retail Acquisitions in March 2015. The 88-year-old business called in the administrators last week after failing to secure a £60m loan needed to carry on trading.
In the wake of the collapse, Sir Philip has come in for intense criticism for selling the business when its defined benefit pension scheme was running a substantial deficit and for the fact that his family received more than £400m of dividends from the businesses in the years after he bought it in 2000. One MP, John Mann, has called for Sir Philip to be stripped of his knighthood unless he repays the dividends.
At the weekend two House of Commons select committees confirmed that they have called on Sir Philip to appear before them to answer questions on his stewardship of BHS. Today they confirmed that Sir Philip has agreed to attend.
The Insolvency Service probe is unusual because it would normally wait for a final report from the administrator of a business before launching an investigation. But the Business Department said that a “fast-track” process has been ordered given the “unique circumstances” of the BHS case.
Last week Lord Myners, a former City minister, said that Sir Philip had responsibilities to the chain that he acquired for £200m in 2000. “It is the responsibility of the owner [of a business] to either make sure that the pension fund is adequately funded or that the new owner is going to take on that responsibility and is a fit and proper person with adequately funding and sensible plans to ensure that the deficit will be covered” he said.
Sir Philip was knighted by the previous Labour government for “services to retail” in 2006. In 2010 he was appointed by the new Prime Minister, David Cameron, to lead a review into government spending.
The Business Department said that where director misconduct is found by the Insolvency Service dating from after October 2015 and where it caused a loss to creditors a court application could be made for compensation for losses. The BHS pension scheme, which has now been taken on by the state-backed Pension Protection Scheme lifeboat, is the biggest creditor to BHS. By one valuation it is running a £571m deficit.
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