Retail Reckoning
In a pivotal legal decision, former BHS executives Lennart Henningson and Dominic Chandler have been ordered to pay £18M in the aftermath of the infamous collapse of the UK retail giant. The pair, who purchased BHS for a mere £1 in 2015, came under intense scrutiny when the 2016 insolvency left a staggering £1B in unsettled claims.
Legal Consequences and Decisions
Justice Leech’s comprehensive 533-page verdict details the hefty financial consequences for Henningson and Chandler. The court mandated them to pay £13 million for illicit trading — the most substantial award since the enactment of the Insolvency Act 1986 — and an extra £5 million for violating their corporate responsibilities. This £5 million fine signifies the first victorious claim of misfeasance trading in the UK.
The executives could be subject to additional liabilities, potentially reaching up to £133.5 million, pending a conclusive decision later this month. This sum includes penalties for neglecting to consider creditor interests by persisting to trade rather than initiating insolvency procedures.
Implications for the Future
A court hearing for Dominic Chappell, the head of Retail Acquisitions with a track record of insolvency and lavish expenditure from BHS funds, is anticipated shortly. Chappell, who has already served time for tax evasion and was reincarcerated for breaching parole conditions, could be held accountable for half of the £133.5 million award.
Responses and Declarations
FRP Advisory, serving as the liquidator for BHS, initiated the lawsuit against the directors on behalf of creditors. They declared that this legal action forms part of their strategy to rectify the balance and secure significant recoveries for the estate, with a particular focus on the Pension Protection Fund.
Lynn Dunne, a partner at Ashurst, remarked, “The triumph of the wrongful trading claim and the determination that the directors violated their duty to advance the company’s success is a notable accomplishment for the liquidators. Such claims seldom succeed due to the intricacies in establishing causation and loss.”
