Dominic Chappell and Lennart Henningson must pay £110m to creditors following a High Court ruling.
- The case stems from the collapse of BHS in 2016, which resulted in significant financial losses.
- The directors were found guilty of failing to fulfil their fiduciary responsibilities.
- Chappell engaged in risky financial practices that worsened BHS’s economic conditions.
- Henningson and Chappell have previous orders for payments tied to wrongful trading activities.
Dominic Chappell and Lennart Henningson have been mandated by the High Court to pay £110 million to BHS creditors. This ruling arises in the wake of BHS’s collapse in 2016, a significant event that led to the loss of 11,000 jobs and left a £571 million pensions deficit. The directors, Chappell and Henningson, were adjudged to have breached their fiduciary duties, contributing substantially to the financial woes of BHS.
The High Court’s decision underscores that Chappell’s acquisition of BHS, purchased from Philip Green for a nominal £1, was notably flawed due to a lack of sustainable working capital. Chappell was reported to have indulged in an ill-advised strategy to exploit the BHS Group financially. Mr Justice Leech highlighted this by stating that Chappell’s approach consisted of adopting an ‘insolvency deepening, degenerative strategy’ through expensive loans, attributing 50% of the resultant losses directly to him.
Chappell has been previously ordered to make a payment of £21.5 million related to wrongful trading. Lennart Henningson, alongside Dominic Chandler, is also held accountable for an additional £13 million in wrongful trading charges. These ordered payments reflect their pivotal roles in the financial mismanagement that beleaguered the company.
Corporate governance at BHS during the period under scrutiny has been widely criticised, highlighting deficiencies in oversight and strategic financial planning. The court’s findings illustrate a pattern of neglect among top-tier management, as they failed to navigate the company through its economic challenges responsibly.
The court’s rulings against Chappell and Henningson serve as a potent reminder of directors’ obligations to adhere to corporate fiduciary standards.
