‘Misfeasance trading’: yet another label for directors to worry about
In Re BHS Group Ltd [2024] EWHC 1417 (Ch), the High Court issued a lengthy judgment on claims brought by joint liquidators of four companies in the BHS Group against two former directors. The factual chronology alone spans 175 pages, but the key points are summarised below for convenience. Factual summary On 11 March 2015, Retail Acquisitions Limited (RAL) acquired 100% of the issued share capital of BHS Group Limited (BHSGL), the parent company of the BHS group, for a nominal consideration of £1. In the years leading up to the transaction, BHS had consistently operated at a loss and depended on ongoing financial backing from its former owners. BHS Limited (BHSL), the group’s main trading entity, acted as the sponsoring employer for two defined benefit pension schemes. Due diligence undertaken by advisers to RAL during the acquisition process revealed the severe financial difficulties facing these schemes, identifying an estimated funding shortfall of approximately £300 million (soon t...
