Ex-BHS boss Dominic Chappell knew the chain was insolvent when he bought it from retail mogul Sir Philip Green, the pensions watchdog is claiming .
Former racing driver Mr Chappell bought BHS for £1 in 2015, just over a year before it crashed into administration with the loss of 11,000 jobs.
Fresh questions about the acquisition have emerged after the Financial Reporting Council said BHS could have been insolvent when it was sold, and slapped PwC with a £10 million fine for its discredited audit of the company ahead of the deal.
The Pensions Regulator is now arguing Mr Chappell knew the company was bust at the point of sale, as part of its bid to seize £9.5m from him for the BHS pension fund, sources told the Press Association.
The regulator claims that, because of this, he should have funded the acquisition fees himself, rather than taking the cash out of BHS after the acquisition.
It is understood that the regulator’s contribution notice relates to around £8m in professional fees to firms such as Grant Thornton and Olswang, and £1.5m that Mr Chappell extracted himself.
Mr Chappell is challenging the regulator, saying he was unaware of the true state of finances at BHS.
PA understands Grant Thornton and Olswang were not given access to group accounts when they performed due diligence on the BHS sale and relied largely on information certified by PwC.
Mr Chappell said: “Had they [PwC] done their job correctly we would never have touched BHS with a barge pole.”
A spokesman for PwC said: “The audit failings did not contribute to the collapse of BHS over one year later.”
The Pensions Regulator has dropped all action against Sir Philip after the Topshop boss contributed £363m to the BHS pension fund black hole.
Mr Chappell, however, is being subjected to disqualification proceedings.
Mr Chappell is also embroiled in a separate case with the Pensions Regulator, having been found guilty of failing to provide officials with information on the BHS pension scheme.
He will appear in Hove Crown Court on Friday as part of an appeal against the conviction, with a re-trial of the case due to take place in September.
The latest round in the BHS scandal comes a day after Irish department store chain Guiney’s confiemd that it is to create 20 jobs leasing part of the BHS site in Belfast city centre.
The family firm is investing close to £450,000 and is due to open at the end of November, two years and three months since BHS closed in August 2016 with the loss of 57 jobs.