Now Green threatens to sue former BHS owner

Arcadia alleges Dominic Chappell’s firm misused £12m of the store’s funds

SIR Philip Green’s Arcadia Group has written to the former owner of BHS threatening legal action over the alleged misuse of £12million of company funds during the high street chain’s takeover.

The group alleges that Dominic Chappell’s firm, which bought BHS for £1, failed to honour contractual obligations to pump money into the company.

Concerns centre on £7million taken out of the business within hours of the takeover in March last year by Retail Acquisitions Ltd (RAL) – the company run by twice-bankrupt Chappell. The cash was said to have been used to pay fees to the new owners and their advisers.

These payments included three £1.2 million lump sums – one paid to Chappell, another to his accountants Grant Thornton and a third to his lawyers Olswang. An additional sum of £1.6million was paid to other RAL directors.

Arcadia also alleges that a £5million cash injection which Chappell presented as fresh investment into BHS was in fact a loan from millionaire Alex Dellal’s property firm Allied Commercial. The loan was then said to have been paid off with proceeds from the sale of a BHS warehouse.

Copies of the legal warnings were sent to Chappell and four directors of RAL last Thursday. Other copies have been sent to the Insolvency Service and administrator Duff & Phelps.

BHS went bust in April putting 11,000 people out of work and the Pension Protection Fund was brought in to oversee the firm’s pension scheme which has a £571million deficit.

The Commons joint Business and Work and Pensions committees are due to publish a report tomorrow on the company’s collapse. It is expected to be damning of Green, Chappell and their advisers.

Committee chairman Frank Field MP has already made clear that he thinks Green should be stripped of his knighthood if he does not rescue the pension scheme. The Cabinet Office said this weekend that the situation was ‘under review’.

BHS administrators Duff & Phelps are expected on Monday to announce the closure of the remaining 114 BHS shops by August 20, though many are expected to shut before then. These stores currently employ about 5,000 staff.

Green, Chappell, Arcadia and the Pension Protection Fund all declined to comment.