Retailer BHS is set to file for administration today, after talks with Sports Direct to purchase a number of its 164 stores collapsed this weekend.
According to the BBC, BHS has debts of more than £1.3b, including a pension fund deficit of £571m. Around 11,000 jobs are at risk.
Last month, creditors voted in favour of a Company Voluntary Arrangement (CVA) to cut rental costs across 123 of its stores, but the additional funding required to turn the operation around has not been found.
It is unlikely that the stores will close immediately as the search for a buyer begins, led by administrator Phil Duffy, an MD at Duff & Phelps.
BHS was acquired by Retail Acquisitions Ltd (RAL) in March 2015 for just £1.
The outstanding debts to suppliers in the furniture and furnishings industry are thought to be substantial.
Hannah Maundrell, editor in chief at www.money.co.uk, comments: “It’s really sad news for the struggling high street giant but unfortunately it’s no great shock. BHS simply hasn’t kept up with the fierce competition super-retailers now face. I fear this could be the first of many chains to fall victim of our obsession with online shopping. Their struggles really highlights the importance of identifying a niche and relentlessly pursuing your target market.
“For the moment the stores are still open as usual but it’s worth spending gift vouchers in store ASAP – we’ve seen other retailers in similar situations start to refuse them before. If you shop for items over £100 pay on a credit card and anything under £100 on a MasterCard or Visa debit card to protect yourself in case you need to return it in the future and can’t go back to BHS.
“For employees of BHS its worrying times and my thoughts go out to them. Now is the time to make sure you know your rights so you get what you are entitled to if the worst does happen. Be prepared just in case – sort out your finances, dig out income protection policies and steel yourself and your bank balance for the potential stormy times ahead.”
