The pension lifeboat set to save BHS

STRUGGLING BHS is in crisis talks with the Government’s pension lifeboat scheme in an attempt to unload its crippling £200m pension pot deficit – as it battles to save its High Street stores.

The 88-year- old chain revealed yesterday it plans 370 job cuts across its head office and shops as part of a restructuring that will require landlords to slash its rent bill to keep stores open.

But at the same time the business is looking to get rid of an enormous pension deficit. It could do this by passing the entire scheme over to the Pension Pension Fund if it became insolvent.

The Pension Protection Fund ( PPF) pays compensation to members of pension schemes when a company goes bust and has insufficient assets to pay what it owes savers.

Malcolm Weir, head of restructuring and insolvency at the PPF, which is funded via levies from businesses, confirmed it is in discussion with BHS and ‘other interested parties’, but that no decision had been made.

He said: ‘Members of the pension schemes are protected and can expect to receive at least PPF levels of compensation.’

In some cases the PPF will participate in the restructuring of an insolvent business.

Weir added: ‘By doing this the pension scheme must be much better off than it would have been if the business was simply left to fail.’

BHS said in a statement that it is working to ‘address its pension deficit situation and constructive talks are ongoing.’

On Thursday it announced proposed a company voluntary arrangement (CVA) to its landlords, an agreement put in place to avoid administration or liquidation.

Advised by accounting f i rm KPMG, it hopes landlords will agree to reducing the rent on 47 stores by either 75pc or 50pc.

While 40 stores would stay open for 10 months in the hope it can negotiate for rents of just 25pc.

The 77 remaining shops will be kept open at current rents, to be paid on a monthly basis.

BHS must secure at least 75pc approval by the March 23 deadline for the CVA to go ahead.

Damian Sumner, head of retail agency at advisor JLL, said: ‘Major landlords have been putting plans in place for some time to secure alternative occupiers on BHS stores.

‘The key will be about a balance of retaining income but with the flexibility to implement these plans in the future.’