BHS Buyers To Be Summoned To MPs Inquiry

The entrepreneurs who bought BHS for £1 and the accountants and lawyers who worked on the takeover are to be summoned by MPs probing the high street retailer’s collapse into administration.

Sky News has learnt that the Business, Innovation and Skills (BIS) Select Committee will announce on Thursday that it wants to examine the level of due diligence that Retail Acquisitions Limited (RAL) was legally required to undertake before buying BHS from Sir Philip Green just over a year ago.

Sources said on Wednesday that "representatives of RAL", along with professional advisers on the transaction would be among the witnesses called to give evidence by the Committee.

The BIS inquiry will run in tandem with a separate investigation by the Department for Work and Pensions Select Committee, which is to examine the circumstances surrounding BHS’s £571m pension deficit and its possible implications for taxpayers.

An insider said MPs on the BIS Committee would want to ascertain the extent of the checks made by Sir Philip’s Arcadia Group to ensure that RAL – majority-owned by Dominic Chappell, a former bankrupt and one-time racing driver – was a responsible owner.

It (Other OTC: ITGL - news) is possible that Sir Philip will be invited to give evidence to both committees.

The parliamentary scrutiny of the takeover of BHS – which fell into administration this week, threatening its 11,000-strong workforce – may shed further light on the robustness of the work undertaken by City advisers.

One source said the MPs would want to establish the parameters of the advisers’ role and to understand whether regulatory frameworks appropriately incentivised participants in the BHS deal to behave ethically.

The BIS Committee was also likely, they added, to examine whether the statutory obligations for company directors – and the consequences of breaching them – were sufficiently robust during corporate sale processes.

News (Other OTC: NWSAL - news) of the details of the BIS inquiry came on another day of intense debate about the conduct of BHS’s assorted former owners.

Mr Chappell has been linked to an attempt to buy back BHS , which trades from around 160 stores, but there was scepticism in the City that he would succeed in raising the necessary financing or convincing the administrator that he was an acceptable buyer.

Sky News revealed that the taxman issued a warning notice last week for BHS to pay an outstanding VAT bill of £2.6m within seven days.

The company was also facing a demand for a further £10m in VAT following the sale of its Oxford Street store, which would have been due at the end of June, they added.

A chunk of the proceeds from that disposal were paid to RAL rather than to BHS.

The revelation will fuel questions about the timing of the decision to place BHS in administration even as the row over its collapse threatens to descend into one of the most controversial business closures for many years.

While Duff & Phelps, BHS's administrator, has received dozens of expressions of interest from prospective buyers, most of those parties are likely to be focused on acquiring packages of stores rather than the whole business.

The BHS pension scheme has a £571m deficit under the most expensive calculation, and Sir Philip faces the prospect of writing a large cheque to contribute to plugging that gap.

He is reported to have offered £80m, but that figure was regarded as inadequate.

The retailer's pension liabilities are expected to pass to the Pension Protection Fund, which is funded through a levy on other major employers (Other OTC: UBGXF - news) .