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| Fate of BHS to be decided by creditors in crucial vote | Fate of BHS to be decided by creditors in crucial vote |
| (35 minutes later) | |
| The future of BHS is to be decided at a hotel in west London on Wednesday morning when the 90-year-old chain’s creditors will vote on whether to back a rescue deal. | The future of BHS is to be decided at a hotel in west London on Wednesday morning when the 90-year-old chain’s creditors will vote on whether to back a rescue deal. |
| Darren Topp, the struggling retailer’s chief executive, will address the meeting at Novotel London West in Hammersmith in a bid to persuade landlords, suppliers and others who have registered a claim to give BHS another chance. | |
| Hundreds of creditors have been invited and a large turnout is expected as only votes cast at the meeting or by proxy count towards the deal’s success or failure. | |
| To be pushed through, the company voluntary arrangement (CVA) – a form of insolvency – must win the support of those holding more than 75% of the company’s unsecured debt as represented by the vote. | |
| Without a deal, BHS, which has been loss-making for several years, says it is “very likely” to go into administration, putting more than 10,000 jobs at risk. | Without a deal, BHS, which has been loss-making for several years, says it is “very likely” to go into administration, putting more than 10,000 jobs at risk. |
| Related: BHS battles to stay on the high street | Related: BHS battles to stay on the high street |
| The retailer wants to reduce the rent on 47 of its 164 stores by up to half and slash rents even further on another 40 stores, many of which are likely to close imminently even if the rescue deal is approved. | The retailer wants to reduce the rent on 47 of its 164 stores by up to half and slash rents even further on another 40 stores, many of which are likely to close imminently even if the rescue deal is approved. |
| The crisis comes just a year after Sir Philip Green, the owner of Topshop, sold BHS for £1 to Retail Acquisitions, a consortium of little-known individuals led by Dominic Chappell, a former bankrupt. | The crisis comes just a year after Sir Philip Green, the owner of Topshop, sold BHS for £1 to Retail Acquisitions, a consortium of little-known individuals led by Dominic Chappell, a former bankrupt. |
| Even if the CVA succeeds, the chain’s future is still on a knife edge as BHS’s management needs to raise £100m to stay in business. This includes a £60m loan, likely to come from restructuring firm Gordon Brothers, which will be secured against stock and debtors. | Even if the CVA succeeds, the chain’s future is still on a knife edge as BHS’s management needs to raise £100m to stay in business. This includes a £60m loan, likely to come from restructuring firm Gordon Brothers, which will be secured against stock and debtors. |
| BHS also wants to raise £30m from property, either by selling sites, subletting them or raising loans against them. Its flagship shop on Oxford Street in London and a site in Milton Keynes are thought to be part of a deal. | BHS also wants to raise £30m from property, either by selling sites, subletting them or raising loans against them. Its flagship shop on Oxford Street in London and a site in Milton Keynes are thought to be part of a deal. |
| A key player in the future of the retailer could be the Pension Protection Fund (PPF), which is overseeing BHS’s pension funds that have a deficit of £571m. The PPF agreed on the eve of the meeting that it would abstainfrom the CVA vote. It is by far the biggest creditor and its vote would outweigh any other interests should it choose to get involved. | A key player in the future of the retailer could be the Pension Protection Fund (PPF), which is overseeing BHS’s pension funds that have a deficit of £571m. The PPF agreed on the eve of the meeting that it would abstainfrom the CVA vote. It is by far the biggest creditor and its vote would outweigh any other interests should it choose to get involved. |
| Malcolm Weir, the PPF’s head of restructuring and insolvency, said: “The Pension Protection Fund has agreed in principle with BHS to abstain from a vote on the CVA. This is while we work towards a solution on the pension scheme’s deficits in the interest of members and our levy payers. | Malcolm Weir, the PPF’s head of restructuring and insolvency, said: “The Pension Protection Fund has agreed in principle with BHS to abstain from a vote on the CVA. This is while we work towards a solution on the pension scheme’s deficits in the interest of members and our levy payers. |
| “However, this does not mean the pension schemes issue has been resolved. If the CVA is agreed, we will be working with the company over the coming months to find a solution. However, failure to reach a compromise may still result in insolvency. Members of the pension schemes continue to be protected.” | “However, this does not mean the pension schemes issue has been resolved. If the CVA is agreed, we will be working with the company over the coming months to find a solution. However, failure to reach a compromise may still result in insolvency. Members of the pension schemes continue to be protected.” |
| Green is in talks with the pensions regulator about a contribution, of as much as £280m, that would help reduce BHS’s pensions fund deficit. | Green is in talks with the pensions regulator about a contribution, of as much as £280m, that would help reduce BHS’s pensions fund deficit. |
| Major landlords said they expected the deal to be voted through as its terms allowed them to take back stores where rents had been cut. | Major landlords said they expected the deal to be voted through as its terms allowed them to take back stores where rents had been cut. |
| Topp has insisted BHS still has a place on the high street: “We believe we have a compelling story and a compelling turnaround. I think [creditors] do buy into it,” he said last week. | Topp has insisted BHS still has a place on the high street: “We believe we have a compelling story and a compelling turnaround. I think [creditors] do buy into it,” he said last week. |