“I genuinely think Sir Philip Green thought we would fail,” said Dominic Chappell, the majority shareholder of Retail Acquisitions, which bought the BHS from Green for £1 in March last year.
“He was very hostile about us doing the property company voluntary arrangement (CVA) [which was announced in May this year] but we pulled it off,” he told the work and pensions select committee today.
Chappell said the Arcadia boss was fully aware of his lack of retail experience and his history of bankruptcy, but thought he brought a new pair of eyes and a strong restructuring team to the deal.
He also said Green blocked Sports Direct founder Mike Ashley’s attempt to save BHS from liquidation at the eleventh hour, which ultimately led to its demise and the loss of some 11,000 jobs.
“I went to see Mike Ashley at 4pm and we worked there for 24 hours straight, but once Philip found out it was Sports Direct we were talking to, he went absolutely insane,” he said.
Chappell said Ashley was a “credible buyer” who would have safeguarded the stores and jobs, but only if the pensions regulator agreed that Sports Direct would not be liable for BHS’s pension liabilities.
The pensions regulator couldn’t complete the work in time and Green called in administrators through the £35m charge he still held on BHS, Chappell said.
He blamed the failure of the business on Green failing to stick to his word on sorting out the trade credit insurance for BHS, a “continuation of nonsense” between the pension regulator and Green, and being unable to secure enough working capital.
“I think it is a very important fact that if we resolved the pension issue or if we could have had some way of parking the Philip Green and pension show on one side, we could have had some way of moving forward,” he said.
He did admit he profited from his 13-month stint as owner of the ailing chain, but declined to define exactly how much he made, promising to provide a spreadsheet to MPs at a later date.
He also refused to discuss a £1.5m loan from Retail Acquisitions to a company which owned his father’s home, saying it was a “sideshow” to the main issue.
But he confirmed that a separate amount of £1.5m was transferred from BHS to BHS Sweden as the chain was about to collapse. BHS Sweden is solely owned by fellow Retail Acqusitions owner Lennart Henningson, not BHS.
BHS chief executive Topp told MPs earlier today that he believed the transfer was “theft” and “the worst possible thing to do as it was money to pay salaries for people on £7 per hour working in our shops”.
However, Chappell claimed that the money was required to pay firms like Olswang, Grant Thornton and KPMG and was concerned that Topp had a “different agenda” so was holding it in trust for BHS.
He returned the money less £50,000 in fees when he was reassured that Topp would pay the firms, he said.
When asked if he would have done anything differently during the process, Chappell took some time to think before answering: “We should have spent more time looking at the pension issue before the acquisition, and ensured that Philip Green was contractually bound in to helping with trade insurance.”
He eventually apologised to the workers, when pushed: “I must stand forward as majority shareholder and say we were part of the downfall of BHS.
“I am very upset that there are 11,000 people directly, and many thousands more indirectly, who have lost their jobs.
“It is a travesty that it happened. I am very upset that it happened, and it was avoidable.”