Nearly 1,000 BHS suppliers face being left unpaid by total of £52m

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Nearly 1,000 trade suppliers, from a Lanarkshire biscuit maker to a lighting company in Poole, could be left unpaid to the tune of £52m if a buyer is not found for BHS.

The group’s overall debts could run much higher – to £1.3bn, including money owed to the taxman, suppliers and nearly £450m to landlords, according to documents filed at the time BHS struck a deal to cut rents at dozens of stores last month.

It was hoped that a rental agreement would throw BHS a sufficient lifeline but after managers failed to secure £100m in funds also needed to keep the business going, BHS called in administrators on Monday, putting almost 11,000 jobs at risk. There are now questions over how creditors will be paid and its £571m pension deficit.

It is the small-scale companies who make clothing, cushions, furniture and food for BHS that are likely to be hit hardest by the 88-year-old retailer’s crisis.

One supplier said it was considering legal action to recoup tens of thousands of pounds it is owed. “I might have to raid my pension to stick some cash in the business,” the supplier said. “We will survive but it will be no thanks to Mr Chappell,” he said, referring to the entrepreneur Dominic Chappell whose consortium bought the chain from retail tycoon Philip Green for a token £1 last year.

He said BHS’s management team, led by the chief executive, Darren Topp, were “honest traders” who had been “hung out to dry” by the company’s owner Retail Acquisitions – which was paid £25m from BHS in the 13 months between the department store’s sale and collapse into administration.

But another supplier said BHS’s management had handled the business well since they took over and everything had been “above board”.

“They have put an awful lot of effort into turning the business around. We have been kept well informed and have no complaints,” a director of the UK-based supplier said.

But she added: “BHS was a significant part of our business last Christmas. It will be a blow this year but not a critical one.”

In a sign of suppliers’ rising fears, one clothing supplier, Tango Fashions, reportedly filed a winding-up petition against BHS in the high court earlier this month in an attempt to secure the money it was owed. BHS paid Tango’s £15,000 debt the same day.

Companies said they did not want to be named as they were hoping a buyer would be found to take on the retailer as a going concern.

The administrators Duff & Phelps are understood to have received more than 50 expressions of interest. Many will only want parcels of stores – with fast-growing chains such as B&M Stores, Home Bargains and Sports Direct thought likely to be among those interested. But it is understood there are some groups looking at putting together a bid for 40 to 50 profitable stores and the brand name.

If part of BHS could be kept going, it would also be good news for big landlords, such as Land Securities, Legal & General, and Prudential, which face losing hundreds of millions.

Powered by Guardian.co.ukThis article was written by Sarah Butler, for The Guardian on Tuesday 26th April 2016 19.56 Europe/London

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