Property investors bolstered Dominic Chappell's bid for BHS by handing him the £35m he needed to prove to Arcadia group that he was a suitable buyer for the high street retailer, the Sunday Times reported today.
A month before Sir Philip Green sold BHS for £1 to Retail Acquisitions - majority-owned by Chappell - the son and grandson of the late property tycoon "Black Jack" Dellal, Guy and Alex Dellal, put the cash into an escrow account managed by Olswang, Chappell's legal advisor.
The money came from Allied Commercial Exporters, the Dellals' holding company.
Paul Budge, Arcadia’s finance director, told the Guardian: “We actually asked them to make sure that they deposit £35m with Olswang [Retail Acquisitions’ lawyers] in the Olswang client account to confirm their intentions. If we were going to go forward, sign up some heads of terms and give them a period of exclusivity, they had to do that. So they put £35m into an escrow.”
Last week, MPs investigating the sale of BHS heard that the £35m ultimately convinced them that a deal could be done with Chappell.
Read more: BHS inquiries have "prompted more questions than answers"
The news raises further questions over whether Chappell was a viable buyer for BHS.
Goldman Sachs gave "informal advice" on the sale of BHS and had warned Budge that Chappell was a serial bankrupt with no experience in retail and that the proposal from Retail Acquisitions lacked detail.
After the deal took place, the £35m that had secured Chappell's deal was used to buy North West House, one of BHS's offices on Marylebone Road. ACE then made a £6.5m on selling the property two months afterwards.