The British Home Stores (BHS) trustees did everything possible to make the buyer and seller understand the scale of the deficit at the time of the sale, MPs heard yesterday.
KPMG partner David Clarke who advised the trustees told select committees on 23 May that the trustees and advisers "did everything they could" under the regulatory framework.
He was giving evidence to a joint session of the Work and Pensions Committee (WPC) and Business, Innovation and Skills (BIS) Committee. MPs focused on the role of advisers to the BHS schemes, Arcadia Group and Taveta Investments during the sale of BHS to Retail Acquisitions last year and the arrangements for pensions.
Trustees did not have the power to stop the sale of BHS in March 2015 due to the structure of the scheme, according to Clarke.
"Certain pension schemes have a unilateral wind-up power calling in all the debt which triggers a cataclysmic event. These schemes and trustees do not have that power," he said.
"Had they had this power and exercised it, BHS would have gone into administration in 2014 rather than 2016. So it would not have solved the issue."
Under the circumstances "the trustees and their adviser team did everything they could in the regulatory framework to ask questions of the seller and buyer to make them understand the situation [about the sale on the pensions deficit at the time of the sale]," Clarke continued.
WPC chair and MP Frank Field asked Clarke if any checks were carried out on Retail Acquisitions as a company and its chief Dominic Chappell who brought BHS for £1 last March.
Clarke said KPMG did internet searches on Retail Acquisitions but there was "very little history" on the "new companies set up for the purpose of the acquisition".
Regarding Chappell he added: "I would suggest if you did internet searches of Chappell in early 2015, you would get a very different internet search result than if you do a search or Chappell today."
Clarke was part of a panel which included Deloitte partner Tony Clare, PwC partner Richard Cousins, Nabarro partner Ian Greenstreet and Eversheds partner Emma King.
BIS committee chair and MP Iain Wright said in a statement today: "We heard evidence on Monday that Sir Philip Green and Arcadia knew, via Goldman Sachs, of Chappell's bankruptcies and his lack of retail experience.
"We heard that they would have been aware of this four months before the deal was finally done and yet they went ahead and sold BHS to Chappell's RAL [Retail Acquisitions Limited] consortium. We now want to hear from RAL's advisers what steps they took to establish that Chappell had a credible business plan to turn around BHS."
MPs will hear from the current trustees, former trustees and advisers to Retail Acquisitions on 25 May.
The select committees are looking into what happened at BHS which went into administration last month with a large pension deficit just a year after being sold to Retail Acquisitions.
Field also said in a statement: "Project Thor looks like a great missed opportunity for BHS and its pensioners. We have only begun exploring the circumstances of its failure but the evidence paints a worrying picture of the last 18 months of Sir Philip Green's tenure at BHS. It seems that on offer then was a bigger pension than they now might get from the PPF.
"The build-up to the sale to Chappell is murkier still. We will be asking key players to further enlighten us."
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