Sir Philip Green’s Topshop rescue plan hangs by a thread

Philip Green

The fate of Sir Philip Green’s Arcadia retail empire will be decided this week, when landlords and other creditors vote on a plan to close shops and slash rents as part of a rescue package.

Arcadia, which owns Topshop, warned that if the overhaul was not approved on Wednesday, it was “highly likely” that the group, which employs 18,000 staff, would go into administration.

The restructuring has been thrown into doubt after the Pensions Regulator demanded last week that Sir Philip’s family put an extra £50 million into Arcadia’s pension schemes.

Advisers to Sir Philip, 67, have been holding talks with the regulator. The plan proposed by Sir Philip’s family and Arcadia amounts to £360 million, but this would rise to £410 million under the watchdog’s request.

The regulator’s pension demand emerged on Friday, the day it was disclosed that Sir Philip had been charged with four assaults in the United States after a Pilates instructor alleged that he had touched her inappropriately. Sir Philip denies the charges.

Topshop is the crown jewel of Arcadia, which also owns Burton, Dorothy Perkins, Miss Selfridge and Wallis. The group has come under pressure from online shopping and the growing popularity of fast-fashion brands.

Arcadia is asking creditors, many of which are landlords, to vote in seven company voluntary arrangements, a type of insolvency that struggling companies use to reduce overheads. The CVAs need 75 per cent approval to pass.

The Pensions Regulator has a pivotal role to play in the CVAs because its position is likely to affect how the Pension Protection Fund votes. The fund, the government lifeboat for pension schemes, is a leading creditor in one of the CVAs. Oliver Morley, the PPF chief executive, has said that it would “vote in the best interest of the schemes and the PPF” and would “support the Pensions Regulator to achieve this”, signalling that it would follow the watchdog’s advice.

Arcadia has an estate of 566 shops in the UK and Ireland. It plans to close 23 as part of the CVAs, putting 520 jobs at risk, and wants its landlords to agree to rent reductions of between 30 per cent and 70 per cent at another 194 sites.

All 11 Topshops in the US will be closed, putting an end to Sir Philip’s ambitions there. The tycoon once said that he wanted to build a “billion-dollar business in America”.

Arcadia has also identified another 25 shops that it is likely to close by placing two of its property companies into administration, separate to the CVAs.

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