Some of the largest suppliers have had their cover either dramatically reduced or halted since the group was taken under new ownership.
It is understood that the suppliers that have struggled to get insurance include a major Hong Kong-based clothing manufacturer and a leading cash-and-carry business in Scotland.
Loss-making BHS was sold last month by Sir Philip Green, one of Britain’s best-known tycoons, to a consortium of little-known financiers, lawyers and accountants under the name Retail Acquisitions Limited.
As we reported last month, the buyers paid a nominal £1, and the department store chain’s debts were written off by Sir Philip.
Trade credit insurance is vital for a retailer. It provides suppliers with protection in case the retailer runs into financial difficulties and is unable to pay its bills.
If a supplier cannot get credit insurance for its deals with a retailer, it could ask for payments to be made upfront before handing over goods.
The new owners are now locked in talks with the leading credit insurers, such as Atradius and Euler Hermes, and are attempting to reassure them about their business plan for the department store.
A source close to the credit insurers said they wanted to know more about the new owners’ plans. They added: “You don’t let someone drive around in a new car without buying it first.”
In a statement, BHS said: “This is an issue affecting some suppliers since January. After talking through our business plan with insurers, including EBITDA [earnings before interest, tax, depreciation and amortisation], the situation is improving and has not stopped us placing or receiving orders.”
The owners are on the hunt for a new chairman and finance director for BHS, which has 11,000 staff. They are also reviewing the retailer’s 171 department stores, amid concerns that shops may have to close.
In addition, the owners have to contend with a pension deficit of more than £100m.
Retail Acquistions has promoted Darren Topp from his position as chief operating officer to chief executive. He replaced Richard Price, who is joining Tesco, where he is expected to head clothing brand F&F.
Topp, who has been at BHS for six years, spent more than 20 years at Marks & Spencer. He has said he wants to work with the new owners to return BHS to its “glory days”.
Retail Acquistions includes Keith Smith, a former broker who is acting as chairman, Dominic Chappell, a key member of the consortium and a former racing driver, and Eddie Parladorio, a lawyer who has advised celebrities.
BHS was founded in 1928 in Brixton and went on to become one of the best-known brands on the high street.
However, it has been loss-making for several years amid fierce competition from rivals such as John Lewis, Marks & Spencer and Debenhams.