The family home of Dominic Chappell, the former owner of BHS, was on the brink of being repossessed before cash from the department store chain was used to pay off the mortgage, reports The Guardian.
The Guardian has learned that financial company Amicus initiated legal proceedings against the Chappell family to repossess the property unless their debts were repaid. The debt was settled when the parent company of BHS paid out £1.5m. The money came from BHS and was paid out as an interest-free loan. It has not been repaid.
The saga raises further questions about Chappell’s management of BHS and highlights the chaos behind the scenes as the chain headed for collapse.
The last of BHS’s 164 stores are scheduled to close before the end of month. The demise of BHS has led to the loss of 11,000 jobs and left a £571m pension deficit, which Sir Philip Green, the previous owner, has pledged to “sort”.
MPs described the corporate governance of Retail Acquisitions, the company that owned BHS, as a “joke” after Chappell admitted to the parliamentary committee investigating the demise of BHS that a £1.5m loan had been paid out. One of the directors of Retail Acquisitions, Eddie Parladorio, voted against the loan, with the only two votes in favour cast by Chappell and his friend Lennart Henningson.
However, the MPs were unaware of the financial predicament facing the Chappells and the house at the time of the loan. Chappell told the committee that the £1.5m was paid because the property, which is in Dorset, “needed to be remortgaged”.
Retail Acquisitions, which is 90% owned by Chappell, bought BHS from Green for £1 in March 2015. The company collapsed just 13 months later, but Retail Acquisitions banked at least £17m from it.
The failure of BHS is being investigated by the Insolvency Service, the Financial Reporting Council and the Pensions Regulator. The Serious Fraud Office is also considering whether to launch a formal inquiry.
The mortgage on the family home, where Chappell’s mother and father still live, was provided by London-based lender Amicus. It is thought the loan was initially for less than £1m but was gradually increased.
Amicus declined to comment, citing client confidentiality.
Chappell claimed he had “absolutely no idea what was going on” with the property despite describing it to MPs as “my family home” and the fact that the £1.5m payment that settled the debt was paid from his company.
“I don’t know, it is nothing to do with me, it is my father’s property,” Chappell said when asked about the loan.
“I have absolutely no idea what is going on there, nor do I want to know. That is as far as I am prepared to make a statement. I don’t discuss finances with my father on these matters, so that is where we are.”
The payment of the £1.5m loan from Retail Acquisitions was complex. It was paid to a company called JDM Island Properties, which had only one director and shareholder, Colin Sutton, an associate of the Chappells. JDM Island Properties then bought the Chappell family house. Filings on Companies House reveal that this month the shares in JDM passed from Sutton to Olivia Investments, a Gibraltar-based vehicle that acts as the Chappell family’s investment fund.
