May 25, 2016
Lawyers for BHS suitor knew of his bankruptcy, lawmakers told
May 25, 2016
Lawyers advising Dominic Chappell knew he had previously been declared bankrupt before he led the acquisition of the BHS department store chain from retail tycoon Philip Green, British lawmakers were told on Wednesday.
However, as Chappell was a discharged bankrupt, meaning he had been set free of bankruptcy by the courts, this was no impediment to buying a business, Stephen Hermer, a partner at law firm Olswang, told a joint session of parliament's Work and Pensions and Business, Innovation and Skills select committees.
Chappell's business past has been a focus for the lawmakers since BHS was placed into administration, a form of creditor protection, by Retail Acquisitions last month, putting 11,000 jobs at risk.
Green had owned the 88-year-old, 164-store BHS for 15 years before selling it in March 2015 for one pound to Retail Acquisitions, a group of little-known investors led by Chappell.
The subsequent collapse of BHS is being investigated by MPs, Britain's Insolvency Service and its Pensions Regulator.
Reuters has not been able to reach Chappell for comment, while a spokesman for Green declined to comment.
Hermer, who advised Retail Acquisitions, said in answer to questions from committee members that searches had revealed details of a bankruptcy of Chappell in 2009, and the 2009 administration of a company of which he had been director.
“There are very many well-documented cases of people who have been bankrupt who have gone onto develop successful business careers,” Hermer said.
On Monday, the lawmakers were told that Green's Arcadia group was warned by a senior Goldman Sachs banker that Chappell had a history of bankruptcy.
The pensions regulator is investigating whether Arcadia sought to avoid its responsibilities and should be pursued for a contribution to make good BHS's 571 million pound pension deficit.
Mark Byers, partner at audit firm Grant Thornton, which carried out financial checks on BHS for Retail Acquisitions, said BHS gave it only restricted access to pension details.
“One of the major challenges was the status of the pension scheme. The information we were provided...was relatively limited - we weren't given access to speak to the trustees of the pension scheme.”
Both Byers and Hermer declined to answer several questions from committee members, citing client confidentiality.
Margaret Downes, chairwoman of BHS's pension fund from 2000 until 2013, said the funds' trustees had accepted an unusually long 23-year recovery period to make good a deficit in the fund, in part because of the expectation of a continued 10 million sterling annual cash injection by Green's Arcadia group.
“I had the impression he (Green) was prepared to acknowledge the length of (the recovery programme), and his words of 'into the future' gave us some confidence," she said.
The select committees are due to hear from Retail Acquisitions directors on June 8 and Green on June 15.
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