British Home Stores finally stumbled into administration after spending some time teetering on the brink.
Management were hoping for a white knight to gallop forward to rescue the 88-year-old fashion and lifestyle retailer from the abyss.
This was unlikely to happen as the business is going the way of other High Street stalwarts like C&A and Woolworth’s.
Instead of a white knight, the vultures were holding back to let the business finally die before they circled to pick the bones for the assets worth having.
The administrators would like to sell a going concern, but the they admit the reality is the business will go in bits and pieces.
The only asset most retailers consider of value are the leases to the high street and retail park stores in top trading positions.
Pension deficit under scrutiny
Meanwhile, The Pensions Regulator is investigating a £570 million black hole in the company’s pension scheme.
The ball and chain of the deficit was another reason no white knight arrived.
The deficit outweighs the scheme assets. The firm’s final salary pension closed seven years ago.
More than 20,000 current and former staff paid into the pension and they can look forward to receiving reduced rate retirement incomes as the government Pension Protection Fund looks at moving into safeguard the fund.
The PPF will work alongside the regulator to find out if the company has deliberately taken steps to avoid pension obligations to the staff.
The investigation involves an almost forensic examination of the company accounts and pension scheme and takes some months to sort out.
While the pension is in limbo, the PPF will treat the fund as under protection.
Bhs has 11,000 staff whose jobs are at risk.
Rescue plan
Although the company is in administration, the stores and web site will continue trading.
The current management team bought Bhs from high street entrepreneur Sir Philip Green for £1 a year ago.
The company owed him £250 million, of which £235 million was paid and £15 million is still outstanding. He is unlikely to see the return of all his money.
The newer owners, Retail Acquisitions pledged to raise £160 million to invest in Bhs but failed to deliver.
The administrators now have to decide whether to rescue the company as a going concern, which gives them 12 months breathing space to find a buyer.
The other options are selling stock and assets to raise cash for the creditors or closing the business to secure any cash and stop the company losing any more money.
