Green in new clash as the BHS pension row deepens
Deal hopes are fading – now regulator and tycoon could end up in court
HOPES of a solution to the BHS pension crisis before Christmas were fading last night as Philip Green’s advisers and pension regulators clashed over the state of negotiations.
As the stores group was finally placed into liquidation on Friday and a fresh row broke out over £35million Green claims to be owed by the failed business, relations between the two sides appear to be worsening.
One source said a courtroom battle over the pension shortfall could be looming with both parties now preparing their cases.
The impasse was laid bare last night in a strongly worded statement by The Pensions Regulator which appeared to suggest the future security of the fund remained a key concern.
A spokesman said it had made clear ‘for many months’ what was required but was still waiting for a ‘credible proposal’.
A source close to the deal, who asked not to be identified because the talks had reached a sensitive stage, said he was ‘surprised by the regulator’s comments’. The source said a ‘fully funded cash offer’ had been placed on the table and the regulator’s stance was ‘confusing’.
On Friday a fresh row emerged over £35 million which Green’s advisers claim he is owed by the old BHS business, but which is being disputed by the liquidators FRP Advisory.
It is believed the £35million is included in the calculations by Green’s advisers of his proposal for the pension deficit. The Pension Regulator is understood to be looking for £350million from Green.
Green has insisted any arrangement to plug the BHS pension deficit and funded by him remains voluntary.
But last month The Pensions Regulator issued Warning Notices to him, his family company Taveta and Dominic Chappell, who bought the department store chain from Green last year for £1.
At the time, sources said they were hopeful of solving the crisis before the end of the year – an outcome which would have put pensioners’ minds at rest. Many future BHS pensioners are facing a 10 per cent cut in payouts. Hopes the row would all be over by Christmas now seem increasingly remote.
The Pensions Regulator spokesman said: ‘It remains open to all subjects of the Warning Notices to approach us at any time to resolve this matter through a comprehensive and credible proposal in the interests of scheme members. Our door remains open.’
But he added ‘we are yet to receive a credible and comprehensive proposal’.
But the source said: ‘A fully cash funded proposal has been made to the regulator. How they consider this not credible is somewhat confusing.’
However, the regulator responded: ‘Any settlement offer we accept has to be robust enough to stand the test of time.
‘We will not accept bad deals that are not good enough for members and which could create a greater financial burden on the Pension Protection Fund.’
Another source said they beilieved a pension deal this year was ‘unlikely considering what still needs to be worked through’.
BHS collapsed in April only a year after Green sold it, leading to the loss of 11,000 jobs and leaving a £571million deficit.
In June, Green told MPs in a Parliamentary hearing he would sort out the scheme. However, no deal has been forthcoming and the tycoon was repeatedly seen aboard his new £100million yacht over the summer, which prompted a torrent of adverse publicity.
Work and Pensions Committee chairman Frank Field MP has repeatedly said Green should take personal responsibility for the pension deficit, much to Green’s irritation.
A deal would keep the scheme out of the Pension Protection Fund and reduce the impact on future payouts compared with the provisions of the PPF.
Chappell, a three-times bankrupt, was arrested last month as part of a tax investigation into his family firm Swiss Rock which had received payments from BHS. He has not yet been charged.
The Serious Fraud Office is also conducting preliminary inquiries in order to consider whether to launch a formal investigation.
Both sides in the pension row said talks are continuing despite the starkly conflicting views.
Proposals have also been put forward to buy out the majority of small pension holders who would receive a one-off cash lump sum and reduce future liabilities.
The ultimate deadline for Pensions Regulator enforcement action is on March 1, which would trigger the next stage of The Pension Regulator’s action.
It is understood that setting up a standalone structure for the fund that would be viable in the long-term without the possibility of future funding is at the heart of the discussions.
One source close to the talks said the hoped-for deal would ‘draw a line’ clearly separating the BHS fund from Green’s Arcadia business and its pension scheme.
The option of a rapid turnaround of the situation has not been ruled out, even though sources said that it appeared increasingly unlikely.
One suggested that the next three weeks could prove to be make or break.