British retail group BHS goes into administration

British department stores group BHS collapsed into administration on Monday, putting about 11,000 jobs at risk. Philip Duffy and Benjamin Wiles, managing directors of Duff & Phelps, have been appointed joint administrators, the restructuring firm said. “The group will continue to trade as usual whilst the administrators seek to sell it as a going concern,” it said.

BHS employs about 8,000 people, while 3,000 contractors work with the 88-year-old firm which has 164 stores. Its placing into administration, a form of creditor protection, means it is Britain’s most high profile retail casualty since Phones4U in September 2014.

BHS was acquired for one pound in March 2015 by Retail Acquisitions, a collection of little known investors, from billionaire Topshop owner Philip Green. Green had bought it for £200 million in 2000. Hit hard by intense competition in the UK retail sector and a failure to embrace the shift to Internet shopping, the firm had in March won the support of its creditors for a rescue plan that gave it big cuts to its rent bill. However, saddled with over £1 billion ($1.44 billion)of debt, including a £571 million deficit in its pension schemes,

BHS failed to raise the additional funds it required, particularly from planned asset sales to meet all its contractual payments, prompting the administration process. Last-gasp talks over the weekend with Sports Direct, Britain's biggest sportswear retailer, to engineer another rescue failed. Administration means

BHS's pension fund will likely have to be bailed out by the government-backed Pension Protection Fund (PPF).

Reuters