BHS buyers tipped off to deal by rejected suitor

Retail Acquisitions, the little known company that bought BHS for £1 from Sir Philip Green, was tipped off about the potential acquisition by a colourful businessman to whom the retail billionaire had refused to sell the chain a year earlier.

Sometime Monaco-based Paul Alexander Sutton, who describes himself as a "financial investor and business backer", first approached Sir Philip about buying the chain in late 2013. Mr Sutton has been declared bankrupt twice, although the first has been discharged and the second is being appealed.

Arcadia, Sir Philip's retail conglomerate, said the 2013 approach did not lead to a deal because "we declined to do business with him".

A year later, Sir Philip held talks with Retail Acquisitions, a group of financiers and accountants, which ended up buying the high street chain for £1 last month.

According to one person close to Retail Acquisitions, and a sworn statement from Mr Sutton seen by the Financial Times, it was Mr Sutton who proposed the potential deal to Retail Acquisitions.

People close to Retail Acquisitions and Mr Sutton confirmed that he knew two directors of Retail Acquisitions. These are former racing driver Dominic Chappell, and Edward Parladorio, a solicitor who has advised celebrity clients such as Ulrika Jonsson, Luciano Pavarotti and Hugh Grant.

However, all sides insisted that Mr Sutton was not involved in Retail Acquisitions' acquisition of BHS, which employs 11,000 people and has a pension deficit of at least £100m.

The directors of Retail Acquisitions have no experience in running a high street retailer, and the company is looking for both a chief executive and a finance director for BHS.

Arcadia said that Paul Budge, its finance director, heard Paul Sutton's name in conversation with Mr Chappell's team during the lead-up to the deal, and asked for written clarification that Mr Sutton was not involved in any way with Retail Acquisitions.

A legal, signed document, seen by the FT, from Mr Sutton stating that he was not and would not be involved was received in early February, Arcadia said.

People close to Retail Acquisitions said Mr Sutton had come into contact with Mr Chappell, when Mr Sutton had looked at a deal in relation to Island Harbour, a failed development in the Isle of Wight in which Mr Chappell was involved.

However, the people said Mr Sutton was not involved in that development.

Mr Chappell was a director of Island Harbour Holdings, when it went into administration in March 2009, according to documents from Companies House.

Mr Parladorio, when he was a consultant at MGP Law, which he joined in 2009, acted for Mr Sutton in relation to a high court claim issued by wealthy landowners Lord and Lady Fairhaven. An announcement in March 2010 by MGP law said the claim had been settled.

Retail Acquisitions said: "Paul Sutton is not and has never been involved in any capacity with Retail Acquisitions Ltd. Retail Acquisitions is a collection of professional advisers brought together by Dominic Chappell in order to buy BHS and support the implementation of the business plan formulated by BHS' senior management. The only financial interests in Retail Acquisitions are those of its shareholders, which are as stated at Companies House. Dominic Chappell was first introduced to Philip Green by Arcadia group finance director Paul Budge."

Mr Sutton's spokesman said: "Paul Sutton has made no secret of the fact that he wanted to buy BHS. He believes it is a sleeping retail giant that has the potential to once more become a real force on the British high street."

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