In Depth

Sir Philip Green's Arcadia agrees £30m deal in BHS legal battle

Payment relates to a charge that had been set aside to repay a loan used to fund 2015 buyout

Sir Philip Green has for the second time agreed to a multi-million pound settlement to avoid a protracted legal battle over his involvement in the demise of department store BHS.

A spokesman for BHS’s liquidator, FRP Advisory, said it had agreed a settlement with Green's Arcadia retail empire "in relation to a number of matters".

As a result it has withdrawn a legal action it filed earlier this month at the High Court and in which Arcadia was named as the defendant, says The Guardian

FRP confirmed that as part of the settlement a payment of "more than £30m" would be made from reserves set aside to meet a "standing charge" to Arcadia, which related to a loan issued to support the buyout of BHS by Retail Acquisitions in 2015.

That loan was a controversial topic during parliamentary hearings into the BHS collapse last year. At the time it was made, Arcadia owned the chain and Green was accused of being on "both sides" of its sale.

The buyout itself is largely blamed for the eventual collapse of BHS. Retail Acquisitions was run by twice-bankrupt retail novice Dominic Chappell, who is facing separate charges from the Pensions Regulator for failing to provide information to its investigation.

Arcadia's standing charge was also considered to be a "secured" debt by administrators Duff & Phelps and so it ranked above other claims, including from the pension industry rescue fund.

Duff & Phelps was eventually replaced as administrator by the Pension Protection Fund, which brought in FRP.

Green has already avoided one high profile court action over BHS after he eventually agreed a £363m deal to boost payouts to BHS pension scheme members in February.

In relation to that deal the parliamentary pension committee chairman Frank Field told the Daily Mirror today he has received a trove of new information that will make Green "seasick".

Field said: "The public believe there was a cosy stitch-up." The Mirror says: "there is no suggestion of a stitch-up".

Sir Philip Green's Arcadia faces fresh BHS battle

14 August

Retail tycoon Sir Philip Green faces being hauled over the coals once more over his former ownership of the defunct department store chain BHS after his Arcadia holding company was named in a new legal action. 

The controversial tycoon may have thought he'd drawn a line under the saga in February when, after protracted negotiations, he agreed to pay £363m into the BHS pension scheme.

But in new documents filed at the High Court, his Arcadia holding company, through which his family investment vehicle Taveta owned BHS, is named as the defendant. 

The claimant in the case is SHB Realisations, the new name for BHS since it entered liquidation. The holding company is run by FRP Advisory, the firm that's now the sole liquidator of the failed business, says the Mail on Sunday

The documents give no further details about the case. 

Green owned BHS for around 15 years from the year 2000. During this time he and his fellow director are said to have extracted "hundreds of millions of pounds in dividends".

The billionaire businessman has always insisted that more was invested than earned from BHS during this period and that a subsequent sale (for a nominal £1) to retail novice Dominic Chappell was conducted in good faith.

Chappell oversaw the company for 14 months before it fell into administration early last year.

Reports produced by MPs and the Pensions Regulator claim Green underinvested in the company and bungled a sale to avoid liabilities to the pension scheme.

The tycoon was branded the "unacceptable face of capitalism" with calls for his knighthood to be revoked, although he did eventually fulfil a pledge to rescue the pension scheme this past February. 

Scheme members who take up the offer of moving to a new fund will get a better deal than under the Pension Protection Fund (PPF) but still face lower pension payouts than they were promised.

PPF remains the largest single creditor in BHS. It was responsible for bringing in FRP Advisory when doubts about the past connections between its then sole-administrator Duff & Phelps and Green emerged.

Sir Philip Green tried to dodge BHS pension liability, says watchdog

28 June 

Sir Philip Green sold the failing BHS department stores primarily to "dodge" responsibilities to its 19,000 pension scheme members, says the Pensions Regulator. 

The claim comes in a report from the watchdog on the sale and the chain's subsequent fall into administration, says the BBC

Regulators say Green's "main purpose" in offloading BHS was to avoid responsibility for its pension schemes if the firm should go bust, reports The Guardian

The report amounts to an escalation in the charge sheet against Green, who MPs said last year had stripped hundreds of millions of pounds from BHS before selling it for £1 it to an inappropriately inexperienced buyer.

Two parliamentary committees branded the billionaire the "unacceptable face of capitalism".

During a testy hearing in front of MPs at Westminster, Green apologised to BHS staff and pensioners and said he had acted in good faith in an attempt to keep the business trading. 

He also promised to "fix" the pension scheme's deficit of hundreds of millions of pounds.

However, the rescue took months to put together and was only finalised in March, when Green pledged to put £343m into the plans and set aside a further £20m to cover administration costs. 

Since the rescue, the watchdog says, the schemes are now running a £100m surplus.

A spokesman for Green said: "This is the first and possibly the only time that a private individual, who has not been found to have done anything wrong, has voluntarily rescued a pension scheme. The matter is now closed. 

Sir Philip Green's retail empire posts profit slump

8 June

Sir Philip Green's retail empire saw profits slump by close to four fifths last year, according to accounts filed at Companies House.

Taveta Investments, which owns the Arcadia Group behind the likes of Topshop, Topman, Dorothy Perkins and Wallis, posted a profit of £36.8m in the year to 27 August 2016, down 79 per cent from £172.2m for the previous 12 months.

The results are the first not to include BHS, which Green controversially sold for a nominal £1 in early 2015.

"Taveta’s pre-tax profits were hit by £129m in one-off charges including £26m in legal fees, redundancies and other costs linked to BHS, which collapsed last April," says The Guardian

Revenues were down 22 per cent, or more than £500m, to £1.7bn, with "a big hit coming from the loss of nearly £370m in income from BHS stores after it was sold".

Taveta admitted it is also facing "competition from new fashion retailers at a time when clothing had become a less important part of the household budget" and inflation is eating into disposable income. 

Sales at Topshop and Topman’s UK stores, the biggest brands in the Arcadia empire by far, slid 1.3 per cent to £896m.

According to the Daily Telegraph, Green has called in management consultants McKinsey to advise on turnaround plans, which include "improving the efficiency of Taveta's sprawling portfolio of 40 online sites and increase mobile and international sales".

Despite the poor results, the company's cash reserves remained relatively unchanged at £223m and it paid out around £27m to Arcadia's ultimate owner, Green's wife Tina, for deals agreed when BHS was transferred from the family's direct ownership in 2009.

Taveta still owes the Green family around £87m related to that deal, the Guardian adds.  

Sir Philip Green loses 'key lieutenant' at retail empire

29 March 

Topshop's managing director Mary Homer leaves tycoon after 30 years to head the White Company

Sir Philip Green had long been running out of friends in political circles, now he appears to be losing key allies in the world of business too.

Mary Homer, who has worked with the controversial tycoon since 1987 and has run his Arcadia empire's Topshop clothing business for 11 years, has left to take over fashion and homewares business the White Company.

"Although her exit is said by both sides to be entirely amicable it will still be viewed by some as a blow to the retailer," says the Daily Telegraph.

There have been a string of resignations from Arcadia in recent months, including Burton managing director Wesley Taylor, Topshop retail director Craig McGregor and Miss Selfridge creative director Yasmin Yusuf all leaving the group.

In addition, it has been a tough period for the company following the collapse of BHS, the retailer that made Green famous. The fall-out led to calls for him to be stripped of his knighthood and a £363m rescue deal for the defunct store's pensioners.

Homer is considered to be the biggest loss from those departing lieutenants.

The Financial Times says Topshop is "by far the most valuable part of... Arcadia Group" and that Homer has overseen an aggressive overseas expansion.

The chain "now sells in 620 shops across some 35 countries, and is in the early stages of planning a roll out of 80 stores across China", adds the Telegraph.

Green said he would be looking externally for a replacement and planned to "recruit a world champion… Someone who has been part of the online revolution."

Sir Philip Green's 'loyal managers' win most from BHS pension rescue 

21 March

A group of 16 "loyal senior managers" are the biggest winners of Sir Philip Green's £363m rescue of the BHS pension scheme, say MPs.

Publishing the findings of a detailed review of the deal, the parliamentary pensions committee say this group will gain the most from the removal of a cap that would have applied to their generous pensions.

Meanwhile, says the Daily Telegraph, some of the "ordinary staff" who worked at the department store could lose 20 per cent or more of their full benefits.

Pension committee chairman Frank Field said: "It is clear that Sir Philip prioritised his loyal senior managers, who have had the [Pension Protection Fund's] cap on high pension benefits completely removed.

"That measure was designed to encourage those in positions of influence to urge prudence and responsibility.

"Those who do far less well out of the settlement are the ordinary staff of working age, many of whom lost will have lost their jobs as well."

The Pensions Regulator estimates that the average BHS pension scheme member will get around 88 per cent of their full benefits, mostly as a result of a lower inflation uprating for those transferring to a new fund.

But "some members will receive less than 80 per cent of the value of their full scheme benefits under the settlement", says the Telegraph.

All scheme members will still do better than if the scheme had fallen into the Pension Protection Fund, which would have led to average payouts of 69 per cent of full benefits.

The industry lifeboat scheme only pays 90 per cent of the pension owing to people who have not reached retirement age and applies strict caps on total payouts.

As a result of its findings, the pension committee has called on Green to invest all of any refund he gets as a result of members with smaller pots choosing to take a lump sum rather than ongoing pension payments.

This option is open to 9,000 people with pots worth less than £18,000. If 90 per cent take up the offer, then Green would be entitled to a rebate of £15m.

Sources close to the tycoon told Sky News the £15m should not be classed as a "refund" as it was only ever a "contingency", made as part of the settlement in case needed.

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