The senior board members (other than Sir Philip Green) are next to face the committees comprising Lord Grabiner, non-executive chairman of Traveta Investments Limited and Traveta Investments (No 2) Limited; Ian Grabiner, CEO of Arcadia; Paul Budge, FD of Arcadia and former BHS board member; Gillian Hague, group financial controller of Arcadia; and Chris Harris, group property director for Arcadia. This group of individuals (other than Lord Grabiner and Ian Grabiner) together with Sir Philip Green comprised the Traveta board’s sub-group responsible for negotiating the sale of BHS.

The questioning in this session in the main was directed at Lord Grabiner who was asked to explain why, as the chairman of Traveta, he had no involvement in the sale; was not told about the conclusion of the sale for several days after it happened; and was unable to answer relatively straight forward questions about the group structure. Lord Grabiner considered it entirely appropriate for the sub–group to take it forward but at no time was he told who interested third parties were and he did not consider it necessary to ask.

The board was aware that it had reached the stage where BHS either had to go into an insolvency process or be sold. Lord Grabiner said: “If we could not find an acceptable buyer and could not do that deal, I have no doubt whatsoever that the business would have gone into administration.” When questioned about what he meant by an acceptable buyer, he said the sub-group were looking at this as carefully as they could reasonably have looked at it, these people are astute and, if they found a buyer that they were prepared to sell to on suitable terms, that would be a solution to the problem.

On 10 March (the day before the deal signed) the Traveta board held a night meeting to which Lord Grabiner was not invited despite being the company’s chairman. The meeting was quorate and comprised the sub-group. Lord Grabiner did not seem to consider this unusual. On 16 March (when he first knew about the deal), the Traveta 2 board meeting recorded a technical resolution ratifying the sale on the 11 March.

It further transpires that Lord Grabiner (by virtue of his earlier written submissions to the committees) did not know about Dominic Chappell’s bankruptcies. He confirmed in questioning that he did not know whether Retail Acquisitions was therefore a reputable buyer but considered that the sub-group must have taken this into account when coming to a judgement about whether this was a suitable buyer and, if they did not, they failed in their duty. He confirmed that, despite what has happened since, he would trust that same sub-group again.

When questioned about the Traveta/Arcadia group structure, Lord Grabiner was unable to provide a clear answer to why the corporate structure had changed. He said that whatever structure “they”, presumably meaning the Green family, had adopted, no doubt there were good reasons for it but he was not aware of the reasons. He also considered that, despite only being involved in the sale ratification and not the negotiation process, this was enough to demonstrate independent judgement and reasonable care, skill, and diligence because of the structure of the sub-group. He did not accept that, as chair, he had the overarching accountability for governance.

In Paul Budge’s questioning it was revealed that initial discussions about the sale of BHS took place with Paul Sutton, who worked up a business plan called Project Albion. Their dealings came to a halt after they (presumably the sub-group) heard that Mr Sutton had been using Sir Philip’s name.

When Dominic Chappell came onto the scene, Mr Budge was asked if Mr Sutton was involved as Mr Chappell was present at one of the earlier meetings with Mr Sutton and so they knew there was a connection. Mr Budge explained that Mr Chappell had a large team of serious businessmen and significant advisers around him. He also confirmed that they were aware when they started talking in summer 2014 of one bankruptcy. Being cautious, the bankruptcy was one of the reasons they took informal advice from Goldman Sachs. He did not say if Goldman Sachs told him about the others although in Anthony Gutman’s earlier evidence it did appear that Goldman Sachs was fully aware.

After general probing about the financials, the faith in the management team and the BHS property portfolio, it became clear that continued financial support from Traveta would go on for many months post sale because the sub-group wanted BHS to be a thriving business. These were guarantees of £120 million, £85 million of which remained in place when it went into administration.

Paul Budge told them that they seriously believed that there was a credible business plan and that Retail Acquisitions (Mr Chappell) was surrounded by credible people. In fact, post sale, two of the five directors resigned within two weeks. In asking why it could have gone wrong so quickly, Mr Budge told the committees that the business plan was not executed quickly enough, particularly the property savings that needed to be carried out in the first quarter post sale. This was a key factor.

Questioning then moved onto the share exchange that occurred in 2002 when Traveta 2 was created and £2.3 billion of £1 shares went onto its balance sheet. Following a re-organisation through a High Court-approved method, the share capital reduced to £10 million and £2.29 million was converted to a type of distributable reserve. Those questioned did not know the details because they were not at the management level in the group at the relevant time but Mr Budge agreed to provide details.

When asked more about the property portfolio, the individuals being interviewed at this session were asked if the difficulty to re-negotiate terms with the landlords was the reason behind Project Thor falling apart. Mr Budge confirmed that, as the landlords and suppliers would have to take some kind of impairment for Thor to succeed, they considered that it was not the right time to talk to them about it when coming up to peak trading time (Christmas 2014). If there was no buyer lined up they would have come back to Project Thor.

Mr Budge then went on to tell the committees about the meeting with TPR and PPF held on 4 March, just a few days before the sale. This meeting appears to have ignored the possibility of Thor even though it was still potentially on the table and concentrated on the sale which then resulted in TPR’s moral hazard investigation that remains ongoing. He said that they would have liked to sit around that table to sort out some kind of Project Thor for pensions going forward.

However, we do not think it is surprising that TPR and PPF concentrated on the sale at this point. Our readers will recall from our earlier summary that the draft Thor clearance application was not in postponement. It had been cancelled because TPR made it clear that they would not accept postponement.

Paul Budge did not place blame on TPR per se but felt that the system does not work. He did, however, subtly criticise the inter-relationship between TPR and PPF and the way they inter-relate with companies. We think that this constant reference to a lack of joined up thinking between TPR and PPF will result in a radical change to the way both work and bring the possibility of merger or part merger ever closer.

Post sale, and as part of the deal, it appears that Retail Acquisitions was able to take forward a similar project to Thor, named Project Vera, and had given an undertaking that it would look after the pensioners. It will be interesting to hear what Mr Chappell has to say about this when he gives his evidence.

Our readers should note that this is a very short and selected analysis of the session.