BHS liquidator to examine Sir Philip's claim for £35m

Sir Philip Green sold BHS for £1. Credit: Reuters

FRP Advisory, the insolvency firm that was appointed liquidator of BHS this morning, has confirmed to ITV News that it plans to reexamine the validity of the £35 million floating charge held by Sir Philip Green.

BHS went bust in April owing 7,000 individuals and businesses money. The biggest creditor and by far is the Pension Protection Fund, which has a lodged a claim for £571 million on behalf of the 20,000 members of the company's pensions schemes.

At the front of the queue of creditors is Sir Philip Green.

Sir Philip is a secured creditor thanks to a floating charge that was granted to him on April 14, 2015, one month after he sold BHS to Dominic Chappell.

BHS went bust in April owing 7,000 individuals and businesses money. Credit: PA

Duff and Phelps, the insolvency firm that FRP replaces, has already looked at the integrity of the floating charge and decided it was valid.

FRP intends to look again at that assessment.

If FRP finds evidence that there was an agreement or even an intention to grant the floating charge to Sir Philip before BHS was sold then it may judge he was a "connected party" and challenge his status as a secured creditor.

Duff and Phelps has managed to raise £68.5 million so far from the closure of the BHS stores and the sale of stock, so as it stands, Sir Philip Green is set to receive the £35 million he is owed in full. Unsecured creditors are likely to get back a maximum of 8p for every £1 they are owed.

If the floating charge were to be overturned then Sir Philip would join the ranks of unsecured creditors and his £35 million claim would be shared between them.

In addition to looking at Sir Philip's floating charge, FRP will also be investigating the conduct of BHS directors in the run-up to the failure of the business and it will scrutinise the administration process to-date.

Armed with their new powers as liquidators, FRP will also start to deal with expensive leases which are still wracking up rent claims for the estate even though the premises have been empty for several months.

The job of the liquidators will be to terminate many of these "onerous" leases thorough a process called disclaiming, which should mean that the pot of money for unsecured creditors will not go disproportionately to landlords.

On Friday a spokesperson for Sir Philip told ITV News: "Duff and Phelps have already confirmed the charge is valid, that's all we plan to say on the matter."