In a landmark decision for the retail industry, the UK’s High Court has ruled that Dominic Chappell, former owner of collapsed department store chain British Home Stores (BHS) must repay at least £50m ($63.3m) to cover losses incurred before the company’s collapse, the Financial Times (FT) reported.
The ruling comes after BHS liquidators sued Chappell for wrongful trading, misfeasance, and breach of fiduciary duty.
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The court found that Chappell purchased BHS from Sir Philip Green in 2015 without ‘any prospect’ of securing the working capital needed to sustain the business.
According to the FT, Justice Leech stated that Chappell took the “opportunity to plunder the BHS Group as and when he could”, criticising his lack of experience in running a large retailer.
The court order details the minimum repayment amount, including £21.5m for wrongful trading and £17.5m for breach of fiduciary duty, along with interest and costs.
An additional sum for misfeasance will be determined later.
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By GlobalDataThe decision sets a strong precedent for holding company directors accountable for financial mismanagement.
The BHS liquidators argued that the company should have been closed sooner, minimising losses for creditors.
Earlier this month, the court ruled that two other former BHS directors, Dominic Chandler and Lennart Henningson, would also be liable for at least £18m, with the final amount yet to be determined.
The FT noted Chappell, reportedly citing lack of funds and health concerns, claimed he could not properly defend himself.
The judge, however, dismissed these claims, highlighting Chappell’s failure to adequately address the allegations.
The BHS collapse in 2016 had a significant impact on the UK retail sector, leaving thousands of employees jobless and sparking concerns about corporate responsibility.
This ruling serves as a reminder for business leaders of the importance of sound financial management and ethical conduct.
