• Probe will look at behavior of directors at store chain
  • Service can refer evidence of wrongdoing to prosecutors

U.K. Business Secretary Sajid Javid ordered the Insolvency Service to investigate the behavior of the directors of BHS Ltd. before the store chain went into administration last month. 

Asked in Parliament in London Tuesday by his Labour Party opposite number, Angela Eagle, about how the company had been run, Javid replied: “I share some of those concerns.” He continued: “I have written to the chief executive of the Insolvency Service. I have instructed her immediately to commence an investigation; she has agreed to do so.”

BHS appointed administrators last month to protect against insolvency after failed negotiations to find a buyer and a lack of success in selling property to ease financial strains on the business. Should the chain collapse, it would be the biggest U.K. retail failure since Woolworths Group Plc in 2008. Administration is similar to filing for Chapter 11 bankruptcy protection in the U.S.

The probe will cover all the company’s directors and former directors. While the Insolvency Service can’t itself carry out prosecutions, it can refer its findings to other regulators or prosecutors.

Dominic Chappell’s Retail Acquisitions acquired BHS for 1 pound ($1.45) last year from billionaire Philip Green. Among the company’s problems is a pension deficit of 571 million pounds. When Green bought the business for 200 million pounds in 2000, the plan was fully funded. The billionaire faces a parliamentary interrogation over his part in allowing the shortfall to swell.

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