Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
Dominic Chappell must pay at least £50mn to cover losses racked up by BHS before the department store’s collapse, after a judge found that its former head sought to “plunder” the UK retailer.
The High Court on Tuesday found that Chappell, who led the purchase of the chain from Sir Philip Green for £1, was liable for repayments sought by BHS liquidators, who sued Chappell for wrongful trading, misfeasance and breach of fiduciary duty.
Mr Justice Leech said Chappell — who was jailed for six years in 2020 after being convicted of tax evasion on income he and his companies received from the acquisition — had agreed to purchase BHS without “any prospect” of obtaining working capital to meet its day-to-day financial needs. He then took the “opportunity to plunder the BHS Group as and when he could”.
At a hearing on Tuesday, the judge said Chappell “should make the payments” set out in a draft order.
A copy of the order, seen by the Financial Times, shows the sums include £21.5mn for a wrongful trading claim, £17.5mn for breach of fiduciary duty, plus costs and interest, totalling at least £50mn.
It also orders him to make a separate payment for a misfeasance trading claim, with the amount to be determined at a later date.
The order is subject to final approval from the judge.
Liquidators sued Chappell — a former racing driver who had no experience of running a large retailer when he took charge of BHS — along with two other directors, accusing them of seeking to make money for themselves. They said the company should have ceased trading sooner, reducing losses for creditors.
The judge earlier this month ruled that the other two former directors, Dominic Chandler and Lennart Henningson, were liable for at least £18mn, with the final sum to be determined at a later date.
In a handwritten note to the judge, Chappell said he had “no legal counsel due to lack of funds”, cited lack of access to computing equipment, and also raised health concerns.
A lawyer who has represented Chappell was contacted for comment.
However, the judge said at the hearing on Tuesday that Chappell had failed to adequately deal with any of the allegations against him.
Read the full article here