Watchdog claims BHS boss knew chain was bust

Ex-BHS chief Dominic Chappell knew the chain was insolvent when he bought it from retail mogul Sir Philip Green, the pensions watchdog has claimed .

Mr Chappell bought BHS for £1 in 2015, just over a year before it crashed into administration with the loss of 11,000 jobs.

Fresh questions about the acquisition have emerged after the Financial Reporting Council said BHS could have been insolvent when it was sold, and slapped PwC with a £10 million fine for its discredited audit of the company ahead of the deal.

The Pensions Regulator is now arguing Mr Chappell knew the company was bust at the point of sale, as part of its bid to seize £9.5m from him for the BHS pension fund.

The regulator claims that, because of this, he should have funded the acquisition fees himself, rather than taking cash out of BHS post deal.

It is understood the regulator’s contribution notice relates to around £8m in professional fees to firms such as Grant Thornton and Olswang, and £1.5m Mr Chappell extracted himself.

Mr Chappell is challenging the regulator, saying he was unaware of the true state of finances at BHS.

It is understood Grant Thornton and Olswang were not given access to group accounts when they performed due diligence on the BHS sale and relied largely on information certified by PwC.

The Pensions Regulator has dropped all action against Sir Philip after the Topshop boss contributed £363m to the BHS pension fund black hole.

The Insolvency Service has also stopped short of seeking to ban Sir Philip from acting as a company director.

Mr Chappell, however, is being subjected to disqualification proceedings.