Sir Philip Green decided to sell BHS because of the expense of rescuing its pension fund, according to evidence released by a parliamentary inquiry on Friday.

Chris Martin, the chairman of the BHS pension fund trustees, said in notes on a meeting with Green’s advisers that the billionaire had decided to put the business on the market in early 2015 primarily because the Project Thor rescue scheme was considered too expensive “but also personal factors which have convinced him that now is the correct time to sell”.

Green sold BHS for £1 in March 2015 to Dominic Chappell, who has gone bankrupt three times. The department store collapsed into administration just 13 months later, putting 11,000 jobs at risk and leaving a £571m pension deficit.

At the time of the sale, Green had spent months negotiating the bailout deal with Martin and the other trustees, according to the evidence. He was also fending off requests from the pensions regulator for a report relating to “moral hazard”, the circumstances under which assets had been taken out of the business under Green’s stewardship.

Negotiations over Project Thor were paused in September 2014 when Green and his advisers suggested putting £50m in cash into the pension scheme and Martin said he felt it needed about £100m. Negotiations were paused just after the pensions regulator had asked Green for details of dividends paid out of BHS, management charges paid to Green’s parent company, property transactions and rental payments.

In a meeting on 2 February, just over a month before Green sold BHS to Chappell, Paul Budge, the finance director of Green’s retail business Arcadia, and Neville Kahn, a partner at Deloitte, told Martin that Green was unlikely to agree to take part in the pension regulator’s long-requested moral hazard review unless he was compelled to do so.

Green told MPs this week that Arcadia had only a handful of meetings with the former pension fund trustee chair Margaret Downes, and that the trustees had not sought a deal to fix the deficit in the scheme before 2012. A series of emails released by MPs, however, indicate that from 2008 Downes repeatedly pressed the company to increase its contributions but was told that it could not pay more than £6.5m a year.

The notes also indicate that as late as 2 February, just weeks before the sale to Chappell’s Retail Acquisitions, there were two potential bidders for BHS and Chappell was chosen as frontrunner.



They also show that Green claimed that he had personally finalised the deal with Chappell. In Martin’s notes from a call with Green on 12 March he quotes Green saying he had “put the ball in the net on his own without 27 advisers”. Green told MPs he “one million per cent” would not have dealt with Chappell if he had not been cleared by Goldman Sachs, who advised the tycoon about the sale of BHS for free.

Green said he stood by his testimony given to the parliamentary select committee in which he said that the decision to sell BHS was based on its continuing losses and the fact that Arcadia decided it could no longer afford to fund them. Arcadia issued interest-free loans of £256m to BHS, writing off £200m of loans when it sold the business.

Green also pointed to evidence given to the committee that he had been working to find a solution to the BHS pensions issue throughout. He has promised to “sort” the pension problems at the retailer. “We didn’t run away,” he told MPs.

The new documents published by MPs also provide details about how Retail Acquisitions took £17m out of BHS, with Chappell’s consortium taking a cut from property and financing deals.

Mike Ashley, the owner of Sports Direct, wrote in a letter to MPs that he thought he had agreed a rescue deal for BHS with the administrators.

He confirmed that Sports Direct was in talks with Chappell about buying BHS just days before it collapsed into administration in April, and then again with administrators after it failed.

He said there were two major obstacles to a deal with Chappell, securing consent from the pensions protection fund and pensions regulator, and Arcadia giving up its claim over BHS’s assets, which it held through a £35m loan to the department store chain.

Ashley said: “The BHS pensions scheme was discussed and it is my understanding that a call was made to the pensions protection fund, but we were unable to reach a satisfactory agreement in the time available.

“The deal did not proceed because we were placed under extreme time pressure and for the reasons set out above.”

Ashley, who also revealed that he explored buying BHS from Green in 2006 and 2007, said Sports Direct tried to revive the deal after administrators were called in.

“Our proposal would have potentially saved the vast majority of the jobs and stores at BHS and we felt that this should be taken into account when making a decision as to whether or not our bid was accepted,” he said.

He said he met administrators and Green on 27 April, when he thought a deal had been struck to save BHS.

“Our understanding when we left the meeting was that we had an agreed deal, which was to be executed on Friday 13 May 2016. Following the meeting an SPA [Sale and Purchase Agreement] was sent out by DLA [the law firm] on behalf of Duff & Phelps, which was duly returned within 48 hours. However, as you know, the deal did not happen.”