The Pension Regulator v Sir Philip Green – what happens next?
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Version 0 of 1. Sir Philip Green could be forced to pay hundreds of millions of pounds into the BHS pension scheme after the Pensions Regulator began formal proceedings against the billionaire tycoon. However, the regulator faces a long and arduous battle to erase the pension scheme’s £571m deficit. What action has the regulator taken this week on BHS? The regulator has issued a warning notice to Sir Philip Green and the most recent owner of BHS, Dominic Chappell, and their companies. These warning notices run to more than 300 pages and explain why the regulator believes them liable for providing financial support to the BHS pension scheme, through a one-off contribution and ongoing support. Green and Chappell have been sent different notices. The regulator will not disclose the difference between the notices, but it is understood Green faces far larger financial demands than Chappell, a serial bankrupt. Why has the regulator done this now? It launched an anti-avoidance investigation into BHS in March 2015 after Green sold the department store chain to Chappell. The regulator, led by chief executive Lesley Titcomb, has gathered more than 100,000 documents and now believes it has a case against Green and Chappell. At the same time, the regulator and the Pension Protection Fund have been in talks with Green about a bailout for the pension scheme, but the talks have broken down without a deal despite the tycoon pledging to “sort” the problems facing BHS pensioners. With no deal in place, the regulator has activated its legal powers instead. What happens next? Green and Chappell now have several months to formally respond. Once those responses have been sent, the regulator’s determinations panel will meet to consider the case and make a ruling. The panel is independent from other parts of the regulator and the team that has investigated BHS, but it has the power to demand cash payments or that parties provide ongoing support to the pension scheme. Can the regulator legally force Green to make a payment? Yes, if the determinations panel rules that he should. The regulator was given extensive legal powers through a series of pensions laws. However, Green can appeal against the decision through the legal system, starting with the upper tribunal, then the court of appeal, and finally the supreme court. What are the chances of winning a legal battle? The regulator is heading into unknown territory. It was founded in 2005 but has issued warning notices in just 16 cases. Some of these cases were about establishing pensioners as creditors for a company which has gone bust, such as Lehman Brothers, rather than seeking cash from a third party. A similar case involving Coats Group plc, the thread-making business, has yet to develop beyond the warning notice issued three years ago. What does this mean for Green’s knighthood? The latest development is not positive for the honour. After MPs voted unanimously to strip the tycoon of his title, probably his final hope would be agreeing a rescue deal for the BHS pension scheme. The regulator is still open to agreeing a deal with Green, but the start of enforcement action shows it is not confident about agreeing anything. Ultimately, the forfeiture committee will make a recommendation to the prime minister about the knighthood, but the regulator’s announcement will not count in Green’s favour. |