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What we know so far about BHS’ collapse and the Croydon billionaire who sold it for £1

What we know so far about BHS’ collapse and the Croydon billionaire who sold it for £1
May 06, 2016 Shaking Hands 0 comments
This post was originally published by The Croydon Advertiser on 16/04/2016

What we know so far about BHS’ collapse and the Croydon billionaire who sold it for £1

The state-backed Pension Protection Fund (PPF) is expected to take on the huge deficit, meaning 20,000 members of the original scheme could see their pensions cut by at least 10 per cent.

John Mann, a Labour MP and member of the Treasury select committee, has demanded Sir Philip repay the £400 million he took out of BHS or have his knighthood taken away.

So far, Sir Philip has refused to take the blame for the company’s downfall and, when quizzed about the recent purchase of his yacht by the Daily Mirror, replied: “I can buy what I like with my money. It’s my money.”

Sir Philip has reportedly offered to hand over £80 million towards the pension deficit.

What is next for BHS?

Prior to Monday’s announcement, the company’s negotiations with buyers, including Sports Direct, had been unsuccessful.

Philip Duffy and Benjamin Wiles, managing directors at Duff & Phelps, were appointed joint administrators of BHS.

In a statement, they said BHS “has been undergoing restructuring” and that there was “no alternative” but to put the company into administration.

BHS will continue to trade as usual while a buyer is sought for all or part of the business.

On Thursday, administrators said they had been working on stabilising the business but paid staff yesterday.

It was reported on Wednesday that the former owner Dominic Chappell was talking with US investors about a bid to buy the majority of the chain store’s.

So far the administrators have reportedly received 50 expressions of interest for some or all of the company.

A company spokeswoman was not able to confirm how many staff are employed at Croydon’s BHS store.

The Pension Deficit

BHS’s pension scheme has about 20,000 members. The scheme is expected to be rescued by the PPF, a fund set up to ensure pensions are paid when a company goes bust.

Questions have been asked over why BHS has such a large hole in its pension pot.

The pensions scheme’s deficit – the difference between what it needs to pay out over the coming years and how much money it has – is an estimated £571 million.

Some have accused Sir Philip of taking too much money out of BHS – money that could have been invested in the company to modernise it and boost the pension fund.

Sir Philip says he sold the business in a good state with a chance at a sustainable future. He suggests that it is mismanagement by the new owners that has led to its current problems.

What will the impact be on Croydon?

The borough’s BHS store is on the first floor of the Whitgift Centre’s East Arcade.

Critics have said the company’s failure to modernise its range of clothes and products was part of the reason it had lost so many customers.

The latest department store administration harks back to when much-loved Allders in North End was forced to close due to financial problems in 2012, citing “tough market conditions” and a downturn in sales.

Speaking to the Advertiser, Max Menon, former director of Allders, said a number of factors could have led to BHS’s downfall, including its stores’ variety.

“The trouble is BHS tried to do everything to please everybody and they pleased nobody,” he said.

“Their product range is poor. It used to have things, like lighting, it was really good at but it tried to do everything.”

Allders in its final days before closing in 2012

Mr Menon, who lives in Park Hill, is positive about Croydon’s future, with the Westfield and Hammerson development on the horizon, but he feels BHS’s future is uncertain.

He added: “The profile of Croydon at the moment, I think with the demise of Allders, things have gone downhill. If you look at the rest of the shops it’s not looking very nice.

“And everybody is really waiting for the Westfield development to happen.

“I think the historical department day stores are numbered partly due to online trading.

“BHS could never compete with Primark. They were pitching on the same level and the fashion product couldn’t match [Primark’s].”

A spokesman for the Whitgift Centre said: “For now the store is trading as normal, and we await an update from the administrators.”

Our readers’ views

We asked our readers on Facebook whether they will miss BHS if its Croydon store was to close.

Sarah Beney said: “I love BHS in Croydon, especially at Christmas. It has fantastic products. It is ridiculously hot in there, though.”

Nicola Goode-Proud said: “I used to work there for a few years and loved it back then. There was great banter with my lovely colleagues. I think the older generation may miss it for the clothing choices.”

Samantha Gilbert Ercolano said: “It is too crowded with stuff; uninteresting oldy-farty stuff. It is too blooming hot as well.”

Megan Cox Loveless said: “BHS used to be great 20 years ago but it’s never really kept up with the times.”