Advisers tell MPs that BHS needed to be sold by Arcadia group to give it any chance of surviving as a business
One of the advisers on the sale of BHS has today told MPs that the company needed to be separated from the Arcadia group for it to have a chance of continuing as a viable business.
Speaking in front of the Work and Pensions committee and the Business, Innovation and Skills committee, Mark Byers, partner at accountancy firm Grant Thornton, explained that the retailer need to renegotiate its leases to have any shot of surviving and that this was "very difficult" while it was still part of the Arcadia Group.
Byers remarked that to be able renegotiate the leases, the company would have needed to convince landlords that it could not afford to continue to pay the current level of rent and "clearly that indication is less believable when it's part of a larger group".
BHS was sold to Retail Acquisitions for £1 last year.
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Byers described the amount the firm was paid for the due diligence work it carried out was a "reasonable sized fee" and "worth our while to carry it out properly", but not, by any means, the largest fee the firm had taken on.
Meanwhile, Stephen Hermer, general counsel for law firm Olswang, said that one of Dominic Chappell's previous bankruptcies had been unearthed in its due diligence work. Chappell is Retail Acquisitions' largest shareholder.
The committee noted that Retail Acquisitions had not waived the advisers' duty of confidentiality in relation to the hearing, while Andrew Frangos, chief executive of Cornhill Capital, remarked that there had initially been a dispute with the company over the degree to which his firm was engaged.
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Frangos said that he was not aware that Chappell was bankrupt before he met him and initially had a good relationship with him, but described his plans to buy up retailers with no substantial experience in the industry as "ambitious".
Earlier on today, the committees took evidence from the trustees of the BHS pension scheme, who said that it did not appear that Retail Acquisitions were fully aware of the position of the pension scheme when it first started exploring buying the business.
BHS collapsed into administration last month, with a pension scheme deficit worth £571m. The administration places around 11,000 jobs at risk.