However, billionaire retail tycoon Sir Philip Green, who owns Arcadia, has hit back at the claims, calling them "fundamentally untrue." Sir Philip claims the payments were made to retain key staff during the sale process.
200 BHS head office staff were told they would receive the payments on June 2, according to the BBC investigation that aired on Monday night, the same day that BHS announced 11,000 jobs would be lost at the chain. The payments were transferred directly to employees' bank accounts and many dubbed it a "Philip Bonus," in reference to Arcadia boss Sir Philip Green.
A spokesperson for Sir Philip told Panorama the payments were made to retain key staff during the sale process. The public relations firm working with Sir Philip provided Business Insider with the below letter from former BHS CEO Darren Topp, signalling he was behind the payments.
Here's the letter in full:
To whom it may concern:
Background
We reduced the Head Office number by just over 100 people at the end of January 2016 as part of driving efficiency reducing costs.
Following the announcement of the CVA at the end of March 2016, almost 100 people resigned in 4 weeks.
Actions
When it became clear we were entering administration keeping Head Office employees was critical to our ability to sell the business whole and indeed run the business short term. This is evidenced by the the discussions we had with potential purchasers all of whom wanted to keep the Head office structure in tact.
In order to stem the tide of resignations I in conjunction with the Administrator sought funds from Arcadia to offer payments to the Head Office team. These monies would then be paid to individuals on either the sale of the business , the closure of the business or when we no longer required them and would be paid in the week following their last day of work or company sale.
This money allowed us to retain key people in order to continue to trade and should a successful buyer have been found the business would have had the necessary resources to be operate normally very quickly.
Arcadia agreed to support the business in order to make these payments.
Darren Topp
Ex CEO Bhs LTD
A spokesperson for Arcadia also says in an emailed statement: "Prior to Panorama this evening showing a programme on BHS, they have published on their website an allegation that is fundamentally untrue. The BBC asked us to clarify the money paid.
"We publish here below a letter written to the BBC today by Darren Topp, former CEO of Bhs who cleared this with the administrator Duff and Phelps this afternoon. We believe this to be self-explanatory."
Sir Philip Green bought BHS in 2000 for £200 million. He sold it for £1 in 2015 and the department store collapsed into administration in April of this year, less than a year after Green sold it.
BHS had been struggling for years and a government report into its collapse blames under-investment and excessive dividend payouts for sending it into a downward spiral. It accuses Sir Philip and subsequent owner Dominic Chappell - a twice bankrupt former racing driver - of the "systematic plunder" of BHS.
The department store had a £275 million pension scheme black hole when the chain collapsed and the BHS pension scheme has fallen into the state-backed Pension Protection Fund (PPF), dubbed the "pensions lifeboat." Sir Philip Green has repeatedly said he will "sort" the funding shortfall.