BUSINESS secretary, Sajid Javid, has instructed the Insolvency Service to launch an immediate investigation into the behaviour of BHS’s former directors and current senior management team following the collapse into administration of the High Street chain last week.
The fast-track move is a bold departure from the norm, as a probe would normally only begin some three months after administrators had finished their own enquiries.
Should the Insolvency Service determine that a director took part in “unfit conduct”, it can impose sanctions by banning any offender from holding such a post for at least two years, up to a maximum of 15 years.
Responding by letter to Javid, Sarah Albon, the Insolvency Service chief executive, said that if a director is found to have been involved in misconduct that took place after 1 October 2015 and caused a loss to creditors, it may apply to a court for an order that compensation be made for any losses incurred.
She stressed that no public updates will made during the Insolvency Service probe in case it undermined “our ability to successfully obtain an appropriate court order or support a relevant criminal investigation and prosecution”.
Details would be published at the investigation’s conclusion and will include the pension protection fund.
Former BHS owner Phillip Green sold BHS to Retail Acquisitions – led by Dominic Chappell, a former bankrupt and racing driver – for £1, when it was saddled with over £1bn in debts and a £571m pension deficit.
The move follows a probe launched by the Business, Innovation and Skills Committee inquiry to examine the steps taken by Arcadia Group to ensure that Retail Acquisitions Limited (RAL) was a responsible owner.
The inquiry will also examine what checks and balances were conducted by RAL to ensure that BHS was a going concern.
Grant Thornton, who are understood to have played an advisory role in the deal, told Accountancy Age that “due to our obligations of confidentiality we cannot talk about individual client engagements.”
Meanwhile, billionaire Sir Philip Green – who is facing calls to be stripped of his knighthood – confirmed that he will appear before MPs in person at work and pensions committee hearing instead of his Monaco-residing wife, Tina, who owns his UK interests, thereby ensuring no British tax on interest or dividend income is paid.
BHS transferred its substantial pension liabilities of £571m into the Pension Protection Fund, the government-supported rescue agency.
The retailer’s pension plan was fully funded when Sir Philip Green took over the company in 2000.
Partners at the insolvency firm Craig Povey and Kevin Murphy were appointed liquidators on 2 February
Three new partners and seven business restructuring advisers have been appointed to the new Preston office
Leonard Curtis Business Solutions Group has opened a new office in Glasgow – the first Scottish office for the professional services provider
Vernon Dennis of Howard Kennedy LLP explores recent and future challenges faced by the insolvency sector