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BHS administration costs row rumbles on

The row over BHS administration costs shows no sign of stopping, as the work and pensions select committee calls for further investigation into Arcadia’s £35m floating charge.

Frank Field, chair of the committee, said: “The costs of the demise of BHS continue to spiral as the pensioners wait for Sir Philip Green to sort the pension fund. The [Pension Protection Fund] PPF are already left scrabbling for a few pence in the pound from what is left of the wreckage of BHS.

“Meanwhile Duff & Phelps, who were appointed by Sir Philip, have left with half a million more than they expected for doing substantially less of the administration than they expected,” he added.

Field takes issue with Duff & Phelps’ increased fee estimate of £4.1m from the £3.5m originally proposed – it has not yet been approved by creditors. Managing director Philip Duffy said the fee is likely to be £4.03m and that the increase largely relates to the complexity of the case.

Field also raised concerns regarding the £35m floating charge that was paid by Duff & Phelps to law firm Linklaters, acting for Arcadia, on 27 October.

Alan Rubenstein, chief executive of the PPF, said Duff & Phelps did not have the permission of co-administrator FRP Advisory and the funds were returned on or around 21 November. They have since been transferred from Duff & Phelps to the current liquidator FRP.

“The return of the £35 million paid to Arcadia by Duff & Phelps vindicates the PPF’s decision to appoint administrators independent from Sir Philip,” Field said. “We are inquiring further into the circumstances of this transaction, which was not authorised by the co-administrator.

However Duffy defended his firm’s actions and said “nobody has provided any support to state that the charge is invalid”.

“This is a fairly simple procedure and I would have expected [FRP Advisory’s law firm] Jones Day and FRP to have done this given the length of time they have been in office

“The only support we have – from our lawyers – is that the charge is valid.”

Field concluded: “If it was such a completely standard move, as Duff & Phelps claim, one wonders why it was reversed by the co-administrators as one of their first acts upon being appointed, and why the PPF seems to take a rather different view.”

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