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BHS collapse: Dominic Chappell could be forced to repay millions BHS collapse: more details emerge over Retail Acquisitions' loans
(about 3 hours later)
Dominic Chappell could be forced to returns millions of pounds that were paid to his consortium during its controversial 13-month ownership of BHS. The former owner of BHS loaned cash to a man connected to a convicted fraudster, raising further questions about its stewardship of the department store chain.
The legal director of BHS has written to Chappell asking him to repay £50,000 that has not been repaid after he moved £1.5m from the retailer to an obscure corporate vehicle in the days before the store chain’s collapse. The discovery, which contradicts statements made to the Guardian last year, follows a torrid week for the retailer which collapsed into administration on Monday putting 11,000 jobs at risk.
Meanwhile, the administrators to BHS are also examining whether loans paid to Retail Acquisitions, Chappell’s consortium, can be called in. The department store was owned by Retail Acquisitions - a consortium led by Dominic Chappell - which bought BHS for £1 in 2015. Retail Acquisitions lent money to Colin Sutton. Although not related, Colin Sutton has been a director of companies run by Paul Sutton, a convicted fraudster who introduced Chappell to Sir Philip Green.
Related: BHS owner Dominic Chappell moved £1.5m out of troubled retailerRelated: BHS owner Dominic Chappell moved £1.5m out of troubled retailer
Almost 11,000 jobs are at risk after BHS collapsed into administration. BHS’s collapse has caused controversy because Sir Philip Green collected more than £580m in dividends, rent and interest payments during his 15-year ownership of the business, while Chappell’s Retail Acquisitions received payments of more than £25m from BHS over the last 13 months. BHS has been left with a pension deficit of £571m, with Green accused of making hundreds of millions of pounds from the retailer before selling it.
The loan is important because Retail Acquisitions received more than £25m of payments from BHS, and Chappell has previously insisted that he had cut ties with Paul Sutton. Chappell said the £1.5m loan was paid to a property company connected to Chappell’s father and used to pay off the mortgage on the older man’s house.
Land Registry documents show that the house in Sunbury-on-Thames was bought last July by a company called JDM Island Properties Limited for £850,000, with Retail Acquisitions Limited named as the lender.
JDM was set up last April and only has one director and shareholder – Colin Sutton. The address given for JDM is the same as B52 Investments, Paul Sutton’s private investment vehicle.
Colin Sutton served as director for a Chappell family business in the 1990s, but also as a director last year for two of Paul Sutton’s companies – Containasuite, a start-up that planned to provide temporary accommodation, and B52 Investments. When contacted by The Guardian on Friday, Chappell denied that Colin Sutton and the loan was connected to Paul Sutton, but did not answer questions about why Colin Sutton had bought the property.
He said: “I have known Colin Sutton for over thirty years. He has worked with my father for most of this time. He is nothing to do with Paul Sutton, apart from doing book keeping work for him.
“JDM owns the house that my mother and father live in. RAL (Retail Acquisitions) using RAL money made a loan secured against the property.”
The Guardian first contacted Chappell about his connections to Colin Sutton in April 2015, but got a different response.
Chappell said he had “no connection” to Colin Sutton, adding: “He’s an accountant, a local accountant. Absolutely no idea.”
When pressed what he meant by “no idea” and if he knew about the connection with Paul Sutton, he said: “No. He’s not on any board of my company whatsoever, nor has been for a very long period of time.”
After being pointed out that he had been on the board of family businesses in the 1990s, he added: “In the 90s. End of. He’s an accountant stroke administrator – absolutely no idea. ”
Just two days after the conversation between the Guardian and Chappell, JDM Island Properties was registered as a company at Companies House by Colin Sutton.
Paul Sutton is a 59-year-old once bankrupt businessman who was found guilty in absentia of embezzlement in France in 2002 and was sentenced to three years imprisonment. The case was unconnected with Chappell and Colin Sutton.
Paul Sutton was in negotiations with Green during 2013 and 2014 about acquiring BHS, with Chappell part of the talks. When Green was tipped off about Paul Sutton’s background, the tycoon pulled out of talks.
Chappell then pressed ahead with his own deal to buy BHS. Green demanded guarantees that Paul Sutton was not involved in the deal.
Last month, the Sunday Times revealed that Chappell and Paul Sutton had set up a secret company in Panama less than a month after Retail Acquisitions acquired BHS. The pair owned 50% of Clarberry, which was incorporated in the tax haven on 1 April last year.
Companies House records show that in 2014 Chappell was also briefly a director of Containasuite. He was on the board for about a month, and told the Guardian last year that he was hired by Paul Sutton to work for Containasuite.
More than 80% of Containasuite’s shares are listed at Companies House as being owned by another firm called B52 Investments, which in turn is controlled byNicola Tarrant, who is Paul Sutton’s partner.
The Guardian has seen paperwork showing that the former name of Retail Acquisitions – Swiss Rock – was used as a code name by Paul Sutton when he was trying to buy BHS in 2014.
Chappell could be forced to return millions of pounds that were paid to his consortium during its controversial 13-month ownership of BHS.
BHS has written to Chappell asking him to repay £50,000 that has not been repaid after he moved £1.5m from the retailer to an obscure corporate vehicle in the days before the store chain’s collapse.
Chappell moved £1.5m into BHS Sweden, an unconnected company, last week as it became clear that BHS was heading for administration. When asked to return the cash by BHS management, Chappell paid it back £50,000 short, saying this represented the cost of transferring the money into Swedish krona and back again.Chappell moved £1.5m into BHS Sweden, an unconnected company, last week as it became clear that BHS was heading for administration. When asked to return the cash by BHS management, Chappell paid it back £50,000 short, saying this represented the cost of transferring the money into Swedish krona and back again.
Chappell has said the funds had remained in the group, were for professional fees, and “all justifiable”.Chappell has said the funds had remained in the group, were for professional fees, and “all justifiable”.
However, the legal director of BHS last week wrote to the two-time bankrupt on behalf of the retailer’s management asking for the £50,000 to be returned. The administrators to BHS are also examining whether loans paid to Retail Acquisitions, Chappell’s consortium, can be called in.
A spokesman for BHS said: “We will do all we can to help the administrators recover all monies due to BHS.”
Duff & Phelps, the administrators, are exploring the payments made between BHS and Retail Acquisitions, which included salaries, management fees, professional fees and interest on loans.
Some of these payments were in the form of loans, including an £8.4m loan that was taken out of BHS in March 2015, just after Retail Acquisitions bought the retailer for £1 from Green. Chappell said this loan was for “professional fees”.
A source close to the BHS said: “We can get money back.”
MPs on two influential committee have launched an investigation into the demise of BHS. Chappell and Green are likely to be called as witnesses.
Chappell said he “cannot comment on the £50k as this is a matter between BHS Sweden and the administrator”.Chappell said he “cannot comment on the £50k as this is a matter between BHS Sweden and the administrator”.
Paul Sutton and Colin Sutton could not be reached for comment.