Directors of collapsed retail chain BHS could face being disqualified from acting as a company director for up to 15 years – and pay compensation to creditors – if they are found to have been guilty of misconduct, according to letters published by the UK government.
Business secretary Sajid Javid has ordered an immediate inquiry into the collapse of the retailer, rather than waiting the usual three months for an administrator’s report.
The investigation is believed to be set to look at the conduct of directors at the time of its insolvency, as well as individuals who were previously directors, if it is thought their actions could have caused detriment to the chain’s creditors.
Meanwhile, retail tycoon Sir Philip Green – who sold the company to Retail Acquisitions for £1 last year – is said to have agreed to appear before a committee of MPs to face questions about the chain.
BHS last week fell into administration with debts of £1.3 billion, including a pension deficit of £571 million. A total of 11,000 jobs are at risk across 164 stores UK-wide.
The 88-year-old firm has 16 outlets in Scotland.
Earlier this week, Iain Wright MP warned that the firm was “crashed into a cliff” by its new owners.
Mr Wright, chairman of the business select committee, claimed that Sir Philip had “stripped” BHS of cash and said he would query whether the Arcadia boss thought that was “appropriate stewardship” of a company.
Mr Javid yesterday wrote to Sarah Albon, inspector general and chief executive of the Insolvency Service, to ask her to begin the investigation.
In her reply, published by the government, Ms Albon pointed out that if the Insolvency Service finds a director guilty of misconduct, they could be ”disqualified from acting as a director for a period of between two and 15 years”.
She added: “Further, for any wrong doing which took place subsequent to 1 October 2015 and which caused a loss to creditors, we can apply to court to order that compensation is paid in respect of the loss.” She also agreed that due to the “nature of public concern” over the issue, the investigation should begin “without delay”.
Ms Albon added that further details of the investigation would not be made public unless a director was suspended.
If a buyer is not found by administrators Duff and Phelps, it would be the biggest retail failure since the collapse of Woolworth’s in 2008.