Since our last
update on the BHS saga, in the July 2016 edition of
Pensions Compass, the parliamentary inquiry and public sessions run
by the Business, Innovation and Skills Committee (the
Select Committee) have ended and Frank Field MP
(Field), who sat on the Select Committee panel,
has criticised Green on his lack of willingness to reach a
settlement. The Select Committee concluded that Philip Green is
largely responsible for BHS's failure and that he is
"the unacceptable face of capitalism" and Field
and other politicians (with the support of tPR) originally demanded
Green to pay £571 million to cover the cost of the BHS
pension deficit. This figure, has however, increased to a
staggering £700 million as a result of bond yields decreasing
in recent months.
It has been an eventful summer for Green, who has, since June of
this year been in negotiations with the trustees of the BHS Pension
Scheme (the Scheme) and tPR, in an attempt to
reach an agreement as to the amount Green should pay to fund the
BHS pension deficit. Field, who originally opened
negotiations with a figure below the estimated pension deficit, has
since increased this figure. Green, on the other hand, has
refused to increase his suggested contribution, which is apparently
around £280 million. The amount currently under
discussion falls short of the large figure originally demanded by
the parliamentary panel, and is thought to be closer to £350
million (or less).
TPR's involvement in the BHS investigation and negotiations
TPR has been involved in its investigation of BHS since Green
sold BHS to Dominic Chappell for £1. More recently, a
spokesperson for tPR explained that their "focus is on
achieving the best possible outcome for members of the BHS pension
scheme and PPF levy payers" and that their negotiations
with Green are ongoing. Green has denied allegations and
suggestions that he has been trying to pressurise tPR to lower the
amount he has to pay, and says he is following the process laid
down by tPR accordingly. Green added that "I
wouldlike to apologise sincerely to all the BHS people
involved in this sorry affair. Contrary to all the coverage I have
been working on this issue on a daily basis, and will continue to
do so with my best efforts to achieve a satisfactory outcome for
all involved as soon as possible."
Although all parties involved say they would like a deal to be
reached as soon as possible, it is more likely that things will be
pushed back to the end of the year as tPR is trying to find a way
to force Green to increase contributions to the Scheme by tPR
threatening to use its anti-avoidance powers. TPR commented
that "Our anti-avoidance investigation continues and our
chief executive has given a clear commitment that we will have made
significant progress by the end of 2016. It's important
that we do not prejudice this complex case and are able to progress
So, what now?
The two possible outcomes for the Scheme trustees and members
are: either Green and tPR will settle and Green will pay an agreed
amount towards the pension deficit, or no settlement will be
reached, in which case, tPR will initiate proceedings against
Green. Should proceedings take place, tPR will issue a
contribution notice to Green (and any other individuals who may be
responsible to pay). Due to the complexity of the procedure,
it could take years before an outcome is reached. Legislation
surrounding this area is complex and as we look closely at how tPR
approaches this and potentially has its powers increased, a new
enquiry has been opened by the Select Committee, which deals with:
tPR's powers; the PPF; and scheme trustees' role and
powers. For a more detailed discussion on the Select
Committee's inquiry, please see the article
Parliamentary Select Committee enquiry into defined benefit
pension schemes: Show-stopper or damp-squib? written
by Clive Weber.
A note to advisers
It is worth noting that since the Select Committee's and
tPR's scrutiny of the events leading up to the demise of BHS
(in particular the transactions that took place), all advisers
(whether legal, actuarial or financial) have become more mindful of
their actions when making such decisions. It has become
apparent that: all advisers can be called as witness in such
circumstances, where they need to account for certain decisions
made (and done so publicly where any person can tune in via
parliament's website); and previous advice given
can be made public (subject to privacy claims of privilege) and
closely scrutinized by the Select Committee.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
To print this article, all you need is to be registered on Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
An assignment of rights under a contract is normally restricted to the benefit of the contract. Where a party wishes to transfer both the benefit and burden of the contract this generally needs to be done by way of a novation.
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).