British retail chain BHS has officially entered liquidation after falling into administration earlier this year.
The company's collapse in April marked the biggest British high street breakdown since Woolworths folded almost a decade ago.
The announcement that administrators have decided to start the official liquidation process marks the official end of the iconic company's 88-year history as a major retailer in the UK. While the company, or sections of the company, could have been bought over and therefore saved from administration prior to this announcement, the liquidation of assets means the firm will now be dissolved entirely and the money used to pay back BHS’s creditors.
However, some creditors may receive returns as low as 8p for every pound invested, thanks to the massive deficit in the BHS pension fund. The deficit had reached £571m at the time of the company's collapse but is likely to have expanded even further since the announcement due to increasing volatility in the markets.
Philip Green, former owner of BHS, has been heavily criticized for his handling of both the firm and its pension pot in the months running up to the collapse. Mr Green insists he did everything in his power to keep the company afloat, despite admitting taking more than £400m in dividends from the retailer before selling it to serial bankrupt Dominic Chappell for just £1.The Pension Protection Fund (PPF) took on responsibility for paying retirement funds to thousands of former BHS employees when administration began, making it BHS's biggest creditor.
Malcolm Weir, Head of Restructuring and Insolvency at the PPF, approved of liquidation plans, stating:
"We believe the liquidation is the right way to secure the best possible recovery for the pension schemes and other creditors of the insolvent company.
"The liquidator will now be able to progress all remaining issues, including the leases and the ongoing investigatory work."
The decision to liquidate comes after prior reports in November stated that Duff & Phelps, the administrators who were appointed to BHS in April, had initially resisted starting the liquidation process as they hoped to secure better returns for creditors. Frank Field MP, chairman of the House of Commons Work and Pensions Committee, said that the news is "another milestone in the collapse of BHS that Sir Philip Green sailed away from".
"At this stage, though, it is welcome," he said.
"It gives the PPF's preferred administrator - rather than Sir Philip's - the best chance of salvaging some money for the pension schemes.'
"It does beg the question, though, of why the BHS pensioners are having to jostle for position, when Sir Philip promised months ago he would 'sort' their pension payments."
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