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BHS goes into administration jeopardizing 11, 000 jobs

RBR Staff Writer Published 25 April 2016

Department store chain BHS has slipped into administration after a final deal to save the struggling business did not come through, putting 11,000 jobs in jeopardy.

In a letter to the company's employees, BHS owner Dominic Chappell was quoted by The Guardian as saying: "It is with a deep heart that I have to report, despite a massive effort from the team, we have been unable to secure a funder or a trade sale.

"I would like to say it has been a real pleasure working with all of you on the BHS project, one I will never forget, you all need to keep you heads held high, you have done a great job and remember that it was always going to be very, very hard to turn around."

Duff & Phelps have been named as the administrators whose task is to find a buyer for the department store chain.

The collapse is considered one of the biggest retail failures since the closure of Woolworths in 2008, which resulted in around 30,000 layoffs.

Entrepreneur Sir Philip Green sold BHS for just £1 in 2015, after purchasing it for £200m in 2000. The chain's new owners Retail Acquisitions who promised to gain £160m funding to turnaround the business failed to raise the amount, reported The BBC.

Last month, the brand came close to collapse before creditors voted to accept a slash in the rent bill for half of its stores. Despite the rent deal, BHS required more funds to continue operations.

Retail Acquisitions were expecting to raise £100m from property transactions. The consortium sold its Oxford Street lease in London for £30m and the lease on a Sunderland store to Sports Direct's Mike Ashley for £2m. The amount was far less than they were hoping to raise from property sale.

The owners also planned to raise a new £60m loan from private equity firm Gordon Brothers and £10m by altering terms of agreement with suppliers.

Besides, it had to raise another £70m from selling property to repay a separate loan from Grovepoint. However, BHS was not successful in generating enough cash from property sales and failed to clinch a deal with Gordon.