Worrying times for the 11,000 British Home Stores workers as their employer goes into administration although the store has said that they will continue to trade as they seek a buyer, although with a £1.3 billion debt, you do wonder who will be willing to take it on.
While the consequences for jobs and pensions are rightly the immediate focus of attention, we can trace the problem back to 2005 when the seeds of BHS’s demise were sown under the control and ownership of Philip Green.
Green, a bought the BHS business for around £200m in 2000 but by 2004 had not only recovered that investment but had doubled it and received around £400m in dividends.
Then in 2005, BHS formed part of a holding company called Taveta Investments Limited which paid Green a dividend of £1.3bn, mainly financed by increasing debts by nearly £1bn and paid to his wife who is domiciled in Monaco therefore avoiding UK Tax.
At the time he described the payment as: 'affordable' and 'leaves the business with plenty of opportunities to grow'.
He obviously got that very wrong as this morning BHS collapsed with debts of over a billion and threatening the livelihoods of 11,000 workers.
As a business model, sucking £1.3bn out of a company and saddling it with £1bn of debt is not the best plan but obviously Mr Green and his wife did very well out of it but that is modern day Capitalism for you, as long as the shareholders are able to dig their fat, greedy fingers in the pie then the people who toil for them on minimum wage can go hang but i guess there are always the payday lenders to pick up the pieces.