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Goldman Sachs told Arcadia about BHS buyer's bankruptcies Goldman Sachs told Arcadia about BHS buyer's bankruptcies
(about 1 hour later)
A Goldman Sachs banker told a key executive from Sir Philip Green's company about the risks of selling BHS to Dominic Chappell, MPs heard.A Goldman Sachs banker told a key executive from Sir Philip Green's company about the risks of selling BHS to Dominic Chappell, MPs heard.
The MPs are examining the role that BHS directors and advisers played before the retailer was sold for £1 last year.The MPs are examining the role that BHS directors and advisers played before the retailer was sold for £1 last year.
Anthony Gutman said he told Sir Philip's Arcadia Group about Mr Chappell's history of bankruptcy and lack of retail experience.Anthony Gutman said he told Sir Philip's Arcadia Group about Mr Chappell's history of bankruptcy and lack of retail experience.
However, the bank did not rule out a deal with Mr Chappell, he said. Arcadia executives said they considered Mr Chappell's history before the sale.
Mr Gutman, co-head of Goldman Sachs' European investment banking services, told MPs he gave the "observations" to Paul Budge, Arcadia's finance director, four months before the sale. The joint session of the Commons Business and Work and Pensions select committees heard BHS had made losses for six years before the sale.
Goldman Sachs was not a formal adviser on the deal because it was "too small" for the investment bank to handle, he said. Under Mr Chappell's ownership, BHS entered administration earlier this year, putting 11,000 jobs at risk and leaving a £571m pensions deficit.
The joint session of the Commons Business and Work and Pensions select committees will hear later from Mr Budge and other senior Arcadia executives. Business Live - MPs grill BHS directors and advisers
'Too small'
Mr Gutman, co-head of Goldman Sachs' European investment banking services, told MPs he gave his "observations" to Paul Budge, Arcadia's finance director, four months before the sale.
Goldman Sachs did not rule out the deal, although the transaction was "too small" for the investment bank to handle as a formal adviser, he said.
Under questioning from MPs, Mr Budge said Arcadia knew of one of Mr Chappell's bankruptcies during sales talks.
However, "this was not one man on his own" and Mr Chappell was part of a consortium with experienced businessmen, the Arcadia finance chief told MPs.
The main criteria for Arcadia was the consortium's access to financing and its desire to keep BHS running, Mr Budge said.
'Concerned''Concerned'
Earlier, the MPs heard that advisers at accountancy firm KPMG also raised concerns with Arcadia about Retail Acquisitions, the acquisition vehicle led by Mr Chappell. Earlier, the MPs heard that advisers at accountancy firm KPMG also raised concerns about the little-known Retail Acquisitions.
David Clarke, a partner at KPMG, told MPs: "We were particularly concerned about its ability to continue to trade and fund both BHS - which was clearly loss-making - and the [pension] schemes."David Clarke, a partner at KPMG, told MPs: "We were particularly concerned about its ability to continue to trade and fund both BHS - which was clearly loss-making - and the [pension] schemes."
KPMG, which was an adviser to the embattled BHS pension schemes, sent their concerns to the retailer and its other advisers ahead of the sale, Mr Clarke said.KPMG, which was an adviser to the embattled BHS pension schemes, sent their concerns to the retailer and its other advisers ahead of the sale, Mr Clarke said.
Business Live - MPs grill BHS directors and advisers
BHS entered administration earlier this year, putting 11,000 jobs at risk and leaving a £571m pensions deficit.
Other advisers from accountancy firms Deloitte and PwC, and law firm Eversheds, said they had not raised concerns about Retail Acquisitions.Other advisers from accountancy firms Deloitte and PwC, and law firm Eversheds, said they had not raised concerns about Retail Acquisitions.
The MPs heard that BHS management decided to pause a pension rescue plan, known as Project Thor, in 2014 to let managers focus on trading.The MPs heard that BHS management decided to pause a pension rescue plan, known as Project Thor, in 2014 to let managers focus on trading.
The rescue plan was then shelved in February 2015 as the possibility of a BHS sale emerged, the committee heard.The rescue plan was then shelved in February 2015 as the possibility of a BHS sale emerged, the committee heard.
That revelation takes some pressure off the Pensions Regulator, which had faced questions about why it did not allow Project Thor to go ahead.That revelation takes some pressure off the Pensions Regulator, which had faced questions about why it did not allow Project Thor to go ahead.