Only two weeks before Dominic Chappell is due to give evidence to a parliamentary inquiry into the collapse of BHS, which begins in earnest today, Duff & Phelps is preparing a High Court claim against him.
According to The Sunday Times Mr Chappell, who heads the Retail Acquisitions consortium, which bought BHS for £1 from Sir Philip Green’s Arcadia Group in March last year, has allegedly refused to share information with the administrator that is trying to find a buyer for the department store and save 11,000 jobs.
The claim will heap further pressure on Mr Chappell whose business track record, which includes three bankruptcies, has raised serious questions about how he was able to buy BHS.
Just over a year after Retail Acquisitions bought BHS it collapsed into administration, not only putting thousands of jobs at risk but pushing the group’s pension fund into the Pension Protection Fund — the government’s lifeboat scheme for at-risk pensions.
Mr Chappell could face a hostile session next month from MPs on the joint work and pensions and business, innovation and skills committee, who are trying to get to the bottom of how the retailer came to collapse so soon after it was sold by Sir Philip. The committee is also trying to understand what impact the collapse of BHS has had on the pension fund as well as any implications it has for the wider pensions regulatory framework in Britain.
Today 13 witnesses will appear before the committee seeking to answer some of these questions. The list of those attending includes some of the top names in the City’s legal, banking and consultancy circles, including senior representatives from PwC, Linklaters and Goldman Sachs, who advised Sir Philip on the sale of BHS.
Much of the MPs’ focus is expected to be on Sir Philip’s lieutenants who played a key role in carrying out due diligence and providing an opinion on the credibility of Mr Chappell and Retail Acquisitions. These include Paul Budge, the Arcadia Group finance director, Gillian Hague, his second in command and Arcadia financial controller, and Chris Harris, the property director.
Lord Grabiner, non-executive chairman of Taveta Investments, the parent company of Arcadia, will also appear but has already filed a written statement saying that he had no involvement in the sale of BHS.
External advisers such as Anthony Gutman, the co-head of UK investment banking at Goldman Sachs who has spearheaded some of the UK’s biggest M&A deals during the past decade, could come in for tough questioning. The banker, who has never appeared before a select committee before, is understood to have helped Sir Philip to vet buyers but was not remunerated.
All the advisers, including those to Mr Chappell who will be questioned on Wednesday, will have to account for their actions in helping to push through a sale that turned out to be disastrous for the business and its employees.
Grant Thornton and Olswang, who shared a £2.4 million “success fee” for helping Retail Acquisitions to seal the deal, could come under intense pressure. One pensions lawyer expert told The Times that the success fees seemed “very disproportionate given that only £1 was paid for the business”, adding that the inquiry would probably want to determine if the fees had prejudiced the BHS pension fund.
Duff & Phelps is still working to sell BHS as a going concern. Speculation is mounting that John Hargreaves, founder of Matalan, and Cafer Mahiroglu, owner of Select Fashions, could clinch a deal to buy the business. Mr Chappell could not be reached for comment.
Image: Isle of Wight County Press