Yahoo Finance Ex-BHS directors must pay £18m over chain's collapse
Two former directors of BHS have been ordered to pay at least £18m to creditors over their role in the collapse of the retailer eight years ago.
A court found Lennart Henningson and Dominic Chandler liable for wrongful trading, misfeasance trading and misfeasance over their management of the High Street chain.
BHS made headlines when it fell into administration with a billion pounds worth of trading liabilities and pension debts in 2016.
It came after retail tycoon Sir Philip Green sold the ailing business to Dominic Chappell, a former racing driver with no retail experience, for £1 in March 2015.
Just over a year into his ownership the chain went under, resulting in 11,000 job losses and a £571m pensions shortfall.
Sir Philip Green was heavily criticised at the time for agreeing to the deal, and later agreed a £363m cash settlement with the Pensions Regulator to plug the gap in the pension scheme.
On Wednesday, Mr Justice Leech ruled that Mr Henningson and Mr Chandler, who worked for Mr Chappell’s company Retail Acquisitions, had breached their corporate duties by continuing to trade despite knowing there was no reasonable chance that BHS could avoid insolvency.
Each must pay £6.5m for wrongful trading and £5.6m between them for the charges of misfeasance.
The men could face additional fines of up to £133.5m for misfeasance trading alongside Mr Chappell who himself faces claims from creditors.
Justice Leech will make a further ruling on what more Mr Henningson and Mr Chandler owe later in June.
'Substantial cuts to pensions'
FRP Advisory, the company acting as liquidator to BHS, brought the case against the directors on behalf of creditors owed money following the retailer’s collapse. These include the government’s Pension Protection Fund.
Claims faced by Dominic Chappell will be considered at a separate hearing this month.
The disgraced former entrepreneur was jailed for six years in 2020 for tax evasion.
A court heard he failed to pay £584,000 in tax on the £2.2m of income he received after buying BHS. It was also claimed that he used the money to buy two yachts, a Bentley and a holiday in the Bahamas.
According to a 2016, Parliamentary Select Committee hearing, the collapse of BHS “created many losers” but also "winners".
Along with those who lost their jobs, around 20,000 current and future pensioners faced “substantial cuts to their entitlements”.
But it said "many of those closest to the decisions that led to the collapse of BHS walked away greatly enriched despite the company’s failure”.
FRP said it had been working to claw back money owed to creditors and made “very substantial recoveries” since 2016.
