BHS is undergoing an unprecedented investigation as its liquidators probe the property transactions of Sir Philip Green and Dominic Chappell.
Sources close to the investigation told The Guardian that FRP Advisory, who are handling the liquidation of the retailer, have undertaken a “massive exercise in data collation” in detail rarely seen before.
The pair have already faced intense scrutiny over their handling of the sale of BHS and its subsequent downfall, which resulted in 11,000 job losses and a £571 million pension deficit which is yet to be fully paid off.
They now face fresh examination over the sale of property during their ownership, including whether this breached their duties as directors.
During the parliamentary enquiry into the collapse of the department store it was revealed that a BHS retail space was sold to a company run by Green‘s stepson by Arcadia a week before BHS was sold to Chappell.
Brett Palos was sold the store in Ealing for £6.9 million, before selling it for £3 million profit three months later. Green has stated he was not involved in the transaction.
It was also revealed that Chappell sold BHS main warehouse in Warwickshire to a company owned by one of his friends for £15 million.
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If either Green or Chappell are found to have knowingly sold these properties under value they risk having broken UK corporate law which states a director has a duty not sell assets undervalue if the company is in financial risk.
Should the pair be found to have breached their duty, they stand to be disqualified by the insolvency service and the liquidators can ask the court to reverse these transactions if they happened within two years of insolvency.
A spokesman for FRP said: “The concurrent administrators [FRP] have commenced their enquiries into a number of historic matters of concern and key transactions, including those raised by the parliamentary enquiry into the company‘s failure, and they are working with their legal advisers, Jones Day, to determine appropriate avenues of further investigation.
“It would not be appropriate to comment in detail on the nature and level of the concurrent administrators‘ investigations at this juncture.
“However, within the parameters of the court order, these have included a review of the possible claims and challenges available to an insolvency office holder pursuant to the Companies Act 2006 and Insolvency Act 1986, including those relating to antecedent transactions and wrongful trading.”
Green is yet to reach a deal over the pensions deficit, reportedly being expected to pay £350 million from his own pocket, alongside £25 million from Chappell. Green has until March to reach a deal before legal proceedings are advanced against him.
Chappell stated that he and his company have been compliant with the regulators since the collapse of BHS, commenting: “We have complied with every regulatory body, of which there is five we have been dealing with.
“We have been open and frank with them right the way through and living up to our fiduciary care as directors of a business that has failed.”