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Retailer BHS files for administration Retailer BHS files for administration
(35 minutes later)
High Street retailer British Home Stores (BHS) has filed for administration, putting 164 shops and almost 11,000 jobs at risk.High Street retailer British Home Stores (BHS) has filed for administration, putting 164 shops and almost 11,000 jobs at risk.
Administrators Duff & Phelps will now try to find a buyer for all or part of the 88-year old business, but in the meantime BHS will continue to trade.Administrators Duff & Phelps will now try to find a buyer for all or part of the 88-year old business, but in the meantime BHS will continue to trade.
They said BHS had "no alternative but to put the group into administration".They said BHS had "no alternative but to put the group into administration".
If a buyer is not found, it would be the biggest High Street collapse since Woolworths in 2008. Meanwhile the pensions regulator said it would investigate whether the group's pension obligations were met.
If a buyer for BHS is not found, it would be the biggest High Street collapse since Woolworths in 2008.
"The group has been undergoing restructuring and, as has been widely reported, the shareholders have been in negotiations to find a buyer for the business," administrators Philip Duffy and Benjamin Wiles, of Duff & Phelps, said in a statement."The group has been undergoing restructuring and, as has been widely reported, the shareholders have been in negotiations to find a buyer for the business," administrators Philip Duffy and Benjamin Wiles, of Duff & Phelps, said in a statement.
"These negotiations have been unsuccessful," they said."These negotiations have been unsuccessful," they said.
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BHS is "very unlikely to meet all contractual payments" as a result of its lower than expected cash balance, the administrators said. What went wrong at BHS?
Shops that have vanished in your lifetime
"The group will continue to trade as usual whilst the administrators seek to sell it as a going concern," they added."The group will continue to trade as usual whilst the administrators seek to sell it as a going concern," they added.
As far as gift vouchers are concerned, BHS said they would still be valid but may only be used for 50% of the value of the purchase. For example, to use a £10 voucher, a customer would need to buy at least £20 worth of products.As far as gift vouchers are concerned, BHS said they would still be valid but may only be used for 50% of the value of the purchase. For example, to use a £10 voucher, a customer would need to buy at least £20 worth of products.
Part of what has put off buyers so far is the company's huge pensions debt. The Pensions Regulator is now looking into whether the company deliberately avoided its pension obligations, leaving a rescue team to pick up the tab.
"We can confirm that we are undertaking an investigation into the BHS pensions scheme to determine whether it would be appropriate to use our anti-avoidance powers," a spokesman said.
It said this would be a long and complex process and refused to confirm any targets of the investigation.
DebtsDebts
The company, which has debts of more than £1.3bn, decided to bring in administrators after talks to sell some of its 164 UK stores to Sports Direct collapsed over the weekend.The company, which has debts of more than £1.3bn, decided to bring in administrators after talks to sell some of its 164 UK stores to Sports Direct collapsed over the weekend.
Last year, Retail Acquisitions, a consortium of financiers, bought BHS from the retail entrepreneur Sir Philip Green for £1.Last year, Retail Acquisitions, a consortium of financiers, bought BHS from the retail entrepreneur Sir Philip Green for £1.
At the time, Retail Acquisitions said they would deliver £160m of funding to help turn around the fortunes of the chain, but have not been able to raise the sum.At the time, Retail Acquisitions said they would deliver £160m of funding to help turn around the fortunes of the chain, but have not been able to raise the sum.
What is administration?What is administration?
BHS has now gone into administration, but what does the process involve? Administrators Duff & Phelps will take over day-to-day control of BHS from the current management team.BHS has now gone into administration, but what does the process involve? Administrators Duff & Phelps will take over day-to-day control of BHS from the current management team.
Their main job will then be to repay people who are owed money by the company. They will immediately review BHS's books and assess what support there is to keep the business trading.Their main job will then be to repay people who are owed money by the company. They will immediately review BHS's books and assess what support there is to keep the business trading.
After that they have three options:After that they have three options:
In practice, the process is likely to involve selling off much of the stock and the leases that BHS owns. The worst outcome, though, would see the company shut down and BHS disappear from the High Street.In practice, the process is likely to involve selling off much of the stock and the leases that BHS owns. The worst outcome, though, would see the company shut down and BHS disappear from the High Street.
'A bit dated''A bit dated'
Phil Dorrell, a retail analyst, told the BBC that going into administration "doesn't mean the stores close today, it means a buyer is sought".Phil Dorrell, a retail analyst, told the BBC that going into administration "doesn't mean the stores close today, it means a buyer is sought".
The likelihood is BHS will be sold off "store by store" and "that probably means the name will disappear", said Mr Dorrell, managing partner at Retail Remedy.The likelihood is BHS will be sold off "store by store" and "that probably means the name will disappear", said Mr Dorrell, managing partner at Retail Remedy.
"The problem is their trading offer is in the 1980s," he said. "Their stores look a bit dated. They are behind the times.""The problem is their trading offer is in the 1980s," he said. "Their stores look a bit dated. They are behind the times."
Last month, the brand was rescued from the brink after creditors voted to accept a cut in the rent bill for about half of its stores.Last month, the brand was rescued from the brink after creditors voted to accept a cut in the rent bill for about half of its stores.
Despite the rent deal, BHS warned that it needed extra funding to continue trading.Despite the rent deal, BHS warned that it needed extra funding to continue trading.
It had been due to announce a new £60m loan last week, but failed to do so.It had been due to announce a new £60m loan last week, but failed to do so.
Separately, Retail Acquisitions had been hoping to raise £100m from property transactions.Separately, Retail Acquisitions had been hoping to raise £100m from property transactions.
They sold their Oxford Street lease in London for £30m but it was far less than they hoped for. And they also sold the lease on a Sunderland store to Sports Direct's Mike Ashley for £2m.They sold their Oxford Street lease in London for £30m but it was far less than they hoped for. And they also sold the lease on a Sunderland store to Sports Direct's Mike Ashley for £2m.
'Sincerely sorry''Sincerely sorry'
In a letter to staff, BHS owner Dominic Chappell said: "It is with a deep heart that I have to report, despite a massive effort from the team, we have been unable to secure a funder or a trade sale."In a letter to staff, BHS owner Dominic Chappell said: "It is with a deep heart that I have to report, despite a massive effort from the team, we have been unable to secure a funder or a trade sale."
Mr Chappell said he was "sincerely sorry" and assured staff they would be paid their wages this month.Mr Chappell said he was "sincerely sorry" and assured staff they would be paid their wages this month.
He added: "I would like to say it has been a real pleasure working with all of you on the BHS project, one I will never forget.He added: "I would like to say it has been a real pleasure working with all of you on the BHS project, one I will never forget.
"You all need to keep your heads held high, you all have done a great job, but remember that it was always going to be very very hard to turn around.""You all need to keep your heads held high, you all have done a great job, but remember that it was always going to be very very hard to turn around."
Business minister Anna Soubry is expected to make an urgent statement in the House of Commons on BHS later.Business minister Anna Soubry is expected to make an urgent statement in the House of Commons on BHS later.
Business secretary Sajid Javid said: "Worrying news for BHS workers this morning.Business secretary Sajid Javid said: "Worrying news for BHS workers this morning.
"Government is in close contact with the company's management at this difficult time.""Government is in close contact with the company's management at this difficult time."
BHS: A history of a High Street stalwartBHS: A history of a High Street stalwart
Are you a BHS employee or customer? Let us know about your experiences. Email haveyoursay@bbc.co.uk with your stories.Are you a BHS employee or customer? Let us know about your experiences. Email haveyoursay@bbc.co.uk with your stories.
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