What next for high street giant BHS as administration speculation mounts?
The future of retailer BHS hangs in the balance today as speculation mounts that it is facing the prospect of full administration or a pre-pack deal.
A stalwart of the British high street for decades, BHS was owned by Sir Philip Green for 15 years before he sold it to Retail Acquisitions last year for £1. Retail Acquisitions was a relatively unknown name at the time, although people are likely to be more familiar with its investors, including former racing driver Dominic Chappell.
BHS, which employs around 11,000, is saddled with more than £1bn worth of debt, including a pensions deficit of £571m.
Last month, the retailer reached an agreement with landlords for a Company Voluntary Arrangement (CVA) which was intended to reduce the rent bill on the majority of its stores and put it on a firmer footing.
However, reports surfaced just before the weekend that BHS was on the verge of filing for administration.
On Sunday, the BBC reported that the retailer could be filing for administration as early as today if no buyer comes forward, in a move that could lead to the closure of its 164 department stores and thousands of job losses. It would be the biggest retail failure since Woolworths in 2008.
Last ditch talks on saving the retailer were held over the weekend.
Sources have said that insolvency experts Duff & Phelps would be handling the administration, but yesterday the firm itself said that it had not been appointed as administrator.
Trade union Usdaw, which represents a number of BHS shopworkers, said in a statement that it is "very concerned".
"We are seeking urgent clarification from the company and urging them to change their attitude to trade unions and begin a dialogue with us at this difficult and worrying time for staff," said David Gill, Usdaw national officer. "We also urge the company to comply with the law, consult staff and Usdaw as the union for BHS workers on the future of the business."
It had been reported that Sports Direct was keen to buy BHS, but the negotiations broke down at the prospect of having to plug the gap in the pension fund. One possible outcome now is that the department store chain could be placed into a pre-pack administration, which could allow Mike Ashley to pick and choose the pieces he would like to buy.
Malcolm Weir, head of restructuring and insolvency at the Pension Protection Fund, said: "Members of the BHS pension schemes can be assured they are protected."