BHS has confirmed that it has filed for administration, putting 11,000 jobs at risk.
Administrators from Duff & Phelps have been called in to handle proceedings after talks with Sports Direct to sell some of BHS’ 164 stores collapsed over the weekend.
The news is said to be the biggest high street collapse since Woolworths in the early stages of the financial crisis back in 2008.
Duff & Phelps said in a statement: “Philip Duffy and Benjamin Wiles, managing directors at Duff & Phelps have today been appointed Joint Administrators of BHS (The Group).
“The Group has been undergoing restructuring and, as has been widely reported, the shareholders have been in negotiations to find a buyer for the business. These negotiations have been unsuccessful.
“In addition property sales have not materialised as expected in both number and value. Consequently, as a result of a lower than expected cash balance, the Group is very unlikely to meet all contractual payments. The Directors therefore have no alternative but to put the Group into administration to protect it for all creditors. The Group will continue to trade as usual whilst the Administrators seek to sell it as a going concern. Further announcements will be made as appropriate in due course.”
As previously reported, BHS owner Dominic Chappell wrote a letter to his staff yesterday, warning them that the company has been unable to secure a funder or a trade sale to save the business.
He added: “I would like to say it has been a real pleasure working with all of you on the BHS project, one I will never forget, you all need to keep your heads held high, you all have done a great job, but remember that it was always going to be very very hard to turn around.”
BHS has debts of more than £1.3 billion, including a pension fund deficit of £571 million, holding 20,500 pensions in its scheme. The pension’s watchdog said today that it will investigate the pension fund deficit.
Christina Tolvas-Vincent, head of Retail Employment at law firm Bond Dickinson, commented: “With almost 11,000 employees, more than 160 stores and a reported pension fund deficit of £571 million, the news will be a big concern for employees. The most likely outcome seems to be that some stores will be sold off to other retailers and a familiar name will disappear after 88 years on the high street.”
Harsha Wickremasinghe, associate at Livingstone Partners, said the BHS business model is at the root of the collapse.
“Its relevance to the current market is unclear –in terms of product range, brand appeal and distribution strategy. These structural weaknesses, coupled with soaring rents, high business rates and pension liabilities, alongside the impact of the National Living Wage, gave BHS little room to manoeuvre,” he said.