The Pensions Regulator has issued a formal warning to Sir Philip Green and Dominic Chappell, the former bankrupt to whom Green sold BHS for £1 last year, which means they face being forced to fill the gap in the company’s pension fund at the time of its collapse earlier this year.
Sir Philip had been in talks with the pensions watchdog about voluntarily offering to fill the £571m deficit, however, despite Green making what he claimed to The Times was a “credible and substantial proposal”, the talks between the two parties have broken down and the regulator has stepped up its action.
The warning amounts to formal enforcement action to recoup the monies owed to 20,000 pensioners of the collapsed business. A 300-page document has been issued to Green and Chappell and the regulator has said it will also pursue Taveta Investments, the Jersey-based entity which owns Arcadia (the parent of Green’s other high street chains including Topshop and Dorothy Perkins) and which is ultimately controlled by Lady Tina Green, a resident of Monoco.
The development, which has been described as unprecedented, has occurred four months after Sir Philip told MPs on two select committees that he would “sort” the pension problem. The regulator could take one of two routes with Green and Chappell, either issue a “contribution notice”, which amounts to a demand to pay a set sum of money into the scheme, or a “financial support direction”, which is a much more flexible arrangement. If Green and Chappell do not meet the Pensions Regulator’s demands, they could face legal action.
BHS was placed into administration in April of this year, leading to 11,000 job losses and leaving a pension deficit of £571m. Green had acquired the business in 2000 and during that time his family and other shareholders received dividends of more than £580m.
Last year Green sold the business for £1 to Chappell and his Retail Acquisitions vehicle, despite Chappell having no retail experience and being a known bankrupt. Retail Acquisitions took around £17m from the business during its 13-month ownership of it. MPs unanimously voted in favour of stripping Green of his knighthood over the saga. However the decision to do that rests with the Honours Forfeiture Committee.
Following its collapse the BHS brand has been revived as an online-only proposition, mostly staffed by ex-employees, after the brand was acquired by Al Mana Group along with BHS.com and its international operations.