Some BHS suppliers have voiced concern over the retailer’s proposed company voluntary arrangement (CVA) ahead of the creditors’ vote next week.
The retailer has submitted proposals to the High Court that ask landlords of 40 loss-making stores to cut rents by 75%. It is seeking a 20% or 50% reduction on a further 47 units. It has 164 stores in total.
The terms of the CVA drawn up by BHS’s adviser, KPMG, require the approval of 75% of BHS creditors, including its suppliers.
One supplier, who is owed around £40,000, said he felt obliged to support the CVA: “If we don’t support them, then they’ll go into administration. If we do then we’ll lose money. We have no option … it’s like blackmail.”
He said he felt socially responsible to help BHS continue trading: “A lot of people are in danger of losing their jobs. It’s our duty to support the community to help make this work.”
Another supplier said: “I don’t want to see its demise – I want it to be a successful company. However, I think eventually – in six months’ time – it’s going to go down the road into administration unless they’re able to produce a lot of operating capital.
“There’s a lot of pressure on BHS’s head and people don’t work well with too much pressure, so inevitably it’s going to fall over. Landlords will vote for it because they don’t want to pick up the [business rates on] the unoccupied building unless they have people lined up.”
Another supplier said: “We are waiting for all the facts before we make a decision.”
It is understood that BHS held a meeting for suppliers last week, but many of those Drapers spoke to had not been invited or were unable to attend because of the short notice.
A spokesman for BHS said: “As we made clear in the meeting with suppliers, the CVA will have no impact on suppliers who continue to enjoy some of the best terms in the industry.”
Creditors will vote on the CVA proposals at a meeting on March 23.