This article is from the source 'guardian' and was first published or seen on . It last changed over 40 days ago and won't be checked again for changes.
You can find the current article at its original source at http://www.theguardian.com/business/2016/mar/23/bhs-creditors-approve-rescue-plan-company-voluntary-arrangement
The article has changed 3 times. There is an RSS feed of changes available.
| Version 1 | Version 2 |
|---|---|
| BHS chief asks public for second chance as retailer wins crucial vote | BHS chief asks public for second chance as retailer wins crucial vote |
| (5 months later) | |
| The boss of BHS has asked for the British public to give the struggling department store a “second chance” after it won a stay of execution thanks to creditors voting in favour of a survival plan. | The boss of BHS has asked for the British public to give the struggling department store a “second chance” after it won a stay of execution thanks to creditors voting in favour of a survival plan. |
| More than 95% of landlords, suppliers and other creditors backed the 88-year-old retailer’s company voluntary arrangement (CVA), an insolvency procedure, at a vital meeting at a hotel in west London on Wednesday. | More than 95% of landlords, suppliers and other creditors backed the 88-year-old retailer’s company voluntary arrangement (CVA), an insolvency procedure, at a vital meeting at a hotel in west London on Wednesday. |
| The approval of the CVA secures the short-term future of BHS’s 10,000 staff. However, the company still needs to restructure its pension scheme, which has a deficit of £571m and is likely to enter the Pension Protection Fund, and raise £100m so it can continue trading and fund a turnaround plan that includes modernising its shops and product range. | The approval of the CVA secures the short-term future of BHS’s 10,000 staff. However, the company still needs to restructure its pension scheme, which has a deficit of £571m and is likely to enter the Pension Protection Fund, and raise £100m so it can continue trading and fund a turnaround plan that includes modernising its shops and product range. |
| Darren Topp, chief executive of BHS, said: “We are delighted that we have the support of landlords and creditors. But we are under no illusions. This is the start. Me and my team now have to roll our sleeves up. | Darren Topp, chief executive of BHS, said: “We are delighted that we have the support of landlords and creditors. But we are under no illusions. This is the start. Me and my team now have to roll our sleeves up. |
| “We want to make it an iconic British brand again. There will be no popping champagne corks tonight. We would like the British public to give us a second chance. Come and see our stores and you will be surprised.” | “We want to make it an iconic British brand again. There will be no popping champagne corks tonight. We would like the British public to give us a second chance. Come and see our stores and you will be surprised.” |
| The CVA involves landlords accepting sharp cuts to the rent on 87 of BHS’s 164 shops. Up to 40 of these shops could close in the next few months if a deal on the size of the rent reduction cannot be reached with property owners. | The CVA involves landlords accepting sharp cuts to the rent on 87 of BHS’s 164 shops. Up to 40 of these shops could close in the next few months if a deal on the size of the rent reduction cannot be reached with property owners. |
| BHS had warned it would fall into administration if the CVA was rejected and it was not able to reduce its rent bill. Three-quarters of creditors at the meeting needed to vote in favour of the CVA for it to be approved. | BHS had warned it would fall into administration if the CVA was rejected and it was not able to reduce its rent bill. Three-quarters of creditors at the meeting needed to vote in favour of the CVA for it to be approved. |
| At the creditor meeting, Topp outlined his turnaround plan. He said BHS saw its core customer as “purposeful mums”. He plans to reduce the number of in-house brands at BHS, introduce a premium range, upgrade the retailer’s website, and install food departments into its shops. | At the creditor meeting, Topp outlined his turnaround plan. He said BHS saw its core customer as “purposeful mums”. He plans to reduce the number of in-house brands at BHS, introduce a premium range, upgrade the retailer’s website, and install food departments into its shops. |
| Trading in autumn and winter was worse than expected, Topp said, which brought forward the need for a CVA. | Trading in autumn and winter was worse than expected, Topp said, which brought forward the need for a CVA. |
| Topp confirmed that BHS was in talks with the PPF about the retailer’s pension scheme entering the state-backed lifeboat. The PPF abstained in the vote, despite being BHS’s biggest creditor. | Topp confirmed that BHS was in talks with the PPF about the retailer’s pension scheme entering the state-backed lifeboat. The PPF abstained in the vote, despite being BHS’s biggest creditor. |
| Dominic Chandler, the legal director of BHS, also said the company was in the final stages of agreeing a £60m loan with Gordon Brothers as part of the £100m of new funding it was trying to raise. BHS is also close to striking a deal on its shop in Oxford Street in London that is likely to see other retailers take space in the property and could raise another £30m. | Dominic Chandler, the legal director of BHS, also said the company was in the final stages of agreeing a £60m loan with Gordon Brothers as part of the £100m of new funding it was trying to raise. BHS is also close to striking a deal on its shop in Oxford Street in London that is likely to see other retailers take space in the property and could raise another £30m. |
| Creditors gave a mixed reaction to the CVA and BHS’s plan. Tony Hyams, an insolvency practitioner representing Kone, which makes escalators and lifts, said: “It gives the creditors a chance to get their money back. It’s better than the alternative.” | Creditors gave a mixed reaction to the CVA and BHS’s plan. Tony Hyams, an insolvency practitioner representing Kone, which makes escalators and lifts, said: “It gives the creditors a chance to get their money back. It’s better than the alternative.” |
| Another creditor, who asked not to be one named, said he was representing nine different funds that had voted for and against the CVA. He said: “There is a turnaround solution and it has got a chance of being successful. But we want more details on the pension fund.” | Another creditor, who asked not to be one named, said he was representing nine different funds that had voted for and against the CVA. He said: “There is a turnaround solution and it has got a chance of being successful. But we want more details on the pension fund.” |
| However, a major clothing supplier said they it was concerned about BHS’s plan to cut the letters of credit it issues. This move will free up to £10m of cash for BHS, but remove protection for suppliers, who are struggling to get credit insurance on deals with the loss-making chain. | However, a major clothing supplier said they it was concerned about BHS’s plan to cut the letters of credit it issues. This move will free up to £10m of cash for BHS, but remove protection for suppliers, who are struggling to get credit insurance on deals with the loss-making chain. |
| Charles Cruxon at Courtaulds, a clothing manufacturer, said: “We are concerned about the long-term ability of BHS to pay for orders. I think voting in favour was the best option, but we still have concerns as to where we are at this time. I am hopeful they will survive and move forward with their plan.” He said he would seek a meeting with BHS management. | Charles Cruxon at Courtaulds, a clothing manufacturer, said: “We are concerned about the long-term ability of BHS to pay for orders. I think voting in favour was the best option, but we still have concerns as to where we are at this time. I am hopeful they will survive and move forward with their plan.” He said he would seek a meeting with BHS management. |
| The PPF warned that BHS could still collapse if it did not agree a deal over its pension. Malcolm Weir, head of restructuring and insolvency at PPF, said: “The CVA for BHS has been agreed, however this does not mean the pension schemes’ deficits have been resolved. | The PPF warned that BHS could still collapse if it did not agree a deal over its pension. Malcolm Weir, head of restructuring and insolvency at PPF, said: “The CVA for BHS has been agreed, however this does not mean the pension schemes’ deficits have been resolved. |
| “The PPF 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.” | “The PPF 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.” |
| British Home Stores, as it was originally known, was founded in Brixton, south London, in 1928 by a group of American entrepreneurs who wanted to create a UK version of Woolworths. | British Home Stores, as it was originally known, was founded in Brixton, south London, in 1928 by a group of American entrepreneurs who wanted to create a UK version of Woolworths. |
| Green bought the business for £200m in 2000, eventually making it part of his retail empire Arcadia. He took about £400m out of BHS in dividends between 2000 and 2004. The PPF could force Green to pump funds into the pension scheme. It has been reported that the billionaire tycoon has offered £80m, including £40m in cash and a £40m loan against BHS assets, to the pension scheme. | Green bought the business for £200m in 2000, eventually making it part of his retail empire Arcadia. He took about £400m out of BHS in dividends between 2000 and 2004. The PPF could force Green to pump funds into the pension scheme. It has been reported that the billionaire tycoon has offered £80m, including £40m in cash and a £40m loan against BHS assets, to the pension scheme. |
| Concerns about the future of BHS have grown since it was taken over by Retail Acquisitions. Dominic Chappell, the man who led the consortium, has been declared bankrupt twice. | Concerns about the future of BHS have grown since it was taken over by Retail Acquisitions. Dominic Chappell, the man who led the consortium, has been declared bankrupt twice. |
| The Guardian revealed this month that Retail Acquisitions took an £8.4m loan out of BHS in the days after buying the retailer in March 2015. More than a third of the loan went to four directors of Retail Acquisitions, including Chappell. Retail Acquisitions said the loan was for “professional fees”. | The Guardian revealed this month that Retail Acquisitions took an £8.4m loan out of BHS in the days after buying the retailer in March 2015. More than a third of the loan went to four directors of Retail Acquisitions, including Chappell. Retail Acquisitions said the loan was for “professional fees”. |
| Chandler addressed the loan at the CVA meeting. He said that only £500,000 of it had come from BHS Limited, the subsidiary that is part of the CVA, and it had now been paid down to £6.9m. He also confirmed that BHS had a “management services” agreement with Retail Acquisitions that involves the retailer paying fees to its owners. This agreement has been benchmarked against rivals, he said. | Chandler addressed the loan at the CVA meeting. He said that only £500,000 of it had come from BHS Limited, the subsidiary that is part of the CVA, and it had now been paid down to £6.9m. He also confirmed that BHS had a “management services” agreement with Retail Acquisitions that involves the retailer paying fees to its owners. This agreement has been benchmarked against rivals, he said. |
| Speaking after meeting, suppliers expressed their support for the owners. Cruxon at Courtaulds said there was “a significant amount of backing” going into BHS, but added: “I don’t think I have any choice really.” | Speaking after meeting, suppliers expressed their support for the owners. Cruxon at Courtaulds said there was “a significant amount of backing” going into BHS, but added: “I don’t think I have any choice really.” |
| Topp, the BHS boss, said: “They are a force for good, they bring different business experience.” | Topp, the BHS boss, said: “They are a force for good, they bring different business experience.” |
| Fewer than 300 people attended the meeting. They asked questions about the company’s financial forecasts, the progress of its attempts to raise £100m, and the prospect of BHS regaining credit insurance, which allows suppliers to protect themselves against the business going bust. BHS revealed thats its financial plans are based on the business growing like-for-like sales by 1% in years two and three of a new three-year plan. | Fewer than 300 people attended the meeting. They asked questions about the company’s financial forecasts, the progress of its attempts to raise £100m, and the prospect of BHS regaining credit insurance, which allows suppliers to protect themselves against the business going bust. BHS revealed thats its financial plans are based on the business growing like-for-like sales by 1% in years two and three of a new three-year plan. |
| Melanie Leech, chief executive of the British Property Federation, which represents landlords, said: “While the CVA will help alleviate some of the short-term pressures on the company, it is imperative that the owners of the company now raise capital to reinvigorate it. | Melanie Leech, chief executive of the British Property Federation, which represents landlords, said: “While the CVA will help alleviate some of the short-term pressures on the company, it is imperative that the owners of the company now raise capital to reinvigorate it. |
| “What we value most with CVAs is open and transparent dealings, so that landlords know exactly the parameters within which they are working. In this case, KPMG [BHS’s advisers] started the engagement process with landlords early, which we welcome.” | “What we value most with CVAs is open and transparent dealings, so that landlords know exactly the parameters within which they are working. In this case, KPMG [BHS’s advisers] started the engagement process with landlords early, which we welcome.” |