One-time UK high street icon, BHS, has announced that it will file for administration today.
The announcement follows a breakdown in negotiations with sports retailer Sports Direct for the sale of some of BHS’s 164 stores (1).
Restructuring firm Duff & Phelps are likely to be the named administrators, and is expected to try to find a buyer for the business as a going concern (2).
Retail Acquisitions acquired the then loss-making BHS a year ago from retail tycoon Phillip Green for the nominal consideration of £1 (3).
Alongside commercial struggles facing strong competition on the high street, BHS has been significantly impacted by high rents on its premises, many of which are locked in to onerous long-term contracts, and huge debts of approximately £1.3bn, including a £571m pension deficit (4).
In spite of BHS successfully entering into a company voluntary agreement (CVA) with its creditors a month ago, including rent reductions, the company warned that it would need to raise £100m in order to continue trading (2).
Retail Acquisitions have been unsuccessful in raising the funds. Property disposals achieved much lower sale value than forecast, and Retail Acquisitions failed to negotiate a loan from Gordon Brothers (4).
BHS employs around 11,000 staff whose jobs may now be threatened during the likely gradual sell off of BHS stores. Owner Dominic Chappell assured staff that they will be paid their wages this month. The retailer’s two employee pension schemes are being assessed to enter the Pension Protection Fund (4).