BHS to find out whether creditors back turnaround plans


Embattled retailer BHS will discover today whether creditors will back its plans to turn around the business by slashing the rents on more than half of its UK stores. 

The department store chain has called on creditors to vote in favour of two company voluntary arrangements (CVAs), which aim to cut costs and prevent widespread store closures.

The fashion and homewares retailer - which has 164 shops - wants to ease the pressure on the business by asking landlords to slash the rents by 50% or 75% on 47 stores. 

It has also told landlords that it needs rents to be reduced "substantially" on 40 more stores, or risk seeing them close within 10 months. 

But the company said it will pay the rent at the current rate on 77 of its "most viable" stores by making monthly rather than quarterly payments for the next three years. 

Struggling companies try to agree a CVA with creditors in a step to revive their fortunes while paying off debts. BHS needs to win the backing of 75% of its creditors to get the green light for its turnaround plans.  

The decision on the proposals comes after BHS announced at the beginning of March that it would axe 150 staff from its head office and 220 from its shops in a move to cut costs. 

The 88-year-old retailer also faces the challenge of protecting the finances of the thousands of savers in its pension scheme, which has a deficit of £571 million. 

The creditor rights of the BHS pension fund have now been passed on to the Pension Protection Fund (PPF), an organisation that safeguards pension scheme members if their employer becomes insolvent. 

The PPF said it expects the scheme to pass over to the organisation, where members will receive compensation for their lost pensions. 

It said savers who have already retired and reached their pension age were likely to receive the same amount in compensation as they were already drawing from the BHS pension scheme. 

However, savers who have yet to retire - or have not reached their pension age - will receive 10% less, with compensation of 90%. 

It has also been reported that the Pensions Regulator is pursuing the former owner of BHS Sir Philip Green for a contribution to the company's pension deficit. 

BHS was sold by the billionaire retail tycoon for £1 to Retail Acquisitions in March last year, as losses widened to £21 million in 2013-14, up from £19 million the year before.