BHS is battling to raise £100m to pay staff wages and continue trading, with 10,000 jobs at risk at the struggling department store chain.
The retailer is still trying to obtain emergency funding almost four weeks after creditors approved a survival plan that involved landlords accepting deep cuts to the rent on stores.
BHS denied speculation on Friday night that it was on the brink of falling into administration. A spokesman said it was “business as usual” at the company and it was “on track” with talks over funding.
Meanwhile, another 1,000 jobs are also understood to be risk at Austin Reed, the 116-year-old tailoring brand, which could call in administrators as early as next week. The retailer, founded in 1900 by Austin Leonard Reed and famous for its suits and shirts, is understood to have filed a notice of intention to appoint administrators on Wednesday and has lined up insolvency experts AlixPartners to advise.
The notice gives Austin Reed, which also owns the Viyella and CC (previously Country Casuals) fashion brands, 10 working days to resolve its financial problems before tipping into administration. It is understood to be looking for a potential buyer.
BHS was due to announce a £60m loan this week from Gordon Brothers, the private equity firm. However, talks over the loan are thought to be complex. Sir Philip Green, who used to own BHS, needs to release security he holds over BHS assets in order for the loan to go through, while the Pension Protection Fund is also in talks with the chain over its £571m pension deficit.
The 88-year-old retailer, which has 164 stores, had won a stay of execution after landlords, suppliers and other creditors backed a deal that involved landlords accepting cuts to their rent of up to 75% on 87 BHS shops. However, the company warned it still needed to raise £100m to pay staff wages and rent and to fund a vital turnaround plan.
Green sold BHS for £1 in March 2015 to a little-known collection of financiers, lawyers and accountants, led by Dominic Chappell, who has been declared bankrupt twice.
When the deal with landlords was approved, chief executive Darren Topp said he wanted the British public to give BHS a “second chance”.
He said: “We want to make it an iconic British brand again. We would like the British public to give us a second chance. Come and see our stores and you will be surprised.”
But Topp is understood to have called an emergency board meeting this month after some of the proceeds from the sale of BHS’s property went to the consortium of owners – known as Retail Acquisitions – instead of the struggling retailer itself.
BHS sold its Oxford Street store for £55m and its Sunderland brand for £2.2m, with the proceeds becoming part of its £100m financial package. However, £600,000 of the Oxford Street deal and £440,000 from the Sunderland deal went to Retail Acquisitions. The consortium said the payments were in accordance with the management services agreement between BHS and Retail Acquisitions.
Austin Reed, whose customers included Winston Churchill and Elizabeth Taylor in its heyday, has struggled in recent years and, in 2015, used a company voluntary agreement to shutter 31 unprofitable stores. It also moved out of its vast London flagship at 113 Regent Street in 2011, exchanging it for smaller premises over the road, but it is now trying to sell that store as well.
Alteri Investors, an American hedge fund, took control of the company last week. Alteri recently bought the business from Darius Capital, a group controlled by property tycoon Guy Naggar, who was previously involved in the now collapsed investment company Dawnay Day. The retailer has more than 160 shops and employs almost 1,000 people.
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