Mar 15, 2019
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Arcadia mulls CVA, could lead to substantial job losses

Mar 15, 2019

The embattled UK retail industry was dealt another blow on Friday after news emerged that Arcadia, one of the UK’s largest fashion employers, is considering a restructuring process which could result in significant store closures and job losses.

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Arcadia owner Sir Philip Green is working with advisers on a company voluntary agreement (CVA) proposal, a form of insolvency, which could be presented to creditors as soon as next month, reported Sky News citing sources close to the matter.

If backed by the retailer’s creditors including landlords and the Pension Protection Fund, the move would trigger substantial job losses in one of the last big retail businesses standing in what has been a tumultuous year marked by a host of high-profile casualties.

Arcadia, whose fashion businesses include Topshop, Topman, Miss Selfridge, Burton and Dorothy Perkins, employs over 20,000 people in the UK and operates over 1,500 stores and concessions.

The company called in advisors to review the size of its store estate earlier this year amid challenging conditions on the UK high street. Formal negotiations with landlords are expected to begin in the coming weeks, and could affect some of the group’s brands disproportionally more than others, according to Sky News.

Green’s retail empire is trying to protect itself from the pressures which have triggered CVAs and bankruptcy from a number of fashion retailers in recent years, including LK Bennett, House of Fraser, Mothercare and New Look. Debenhams has also mulled launching a CVA proposal, and Marks & Spencer is gradually closing over 100 stores by 2022, resulting in over 1,000 job losses.


Arcadia’s CVA would have to be approved by creditors and the Pensions Regulator, and the latter would only endorse the proposal if the restructuring would improve Arcadia’s ability to meet its pension contribution obligations, sources told Sky News.

According to documents published by MPs in 2017, the group’s pension deficit has reached over £565m.

The restructuring programme, expected to launch in late April or early May, could also take the form of an accelerated store closure programme, or a capital injection. A sale is seen as an unlikely option.

In addition to a bad combination of rising costs and declining consumer spending Arcadia has been hit by a sexual harassment scandal involving Philip Green and a number of head office staff.

He has also been previously accused of profiting from the collapse of the BHS department store, which led to the loss of 11,000 jobs and a pension deficit of £571m in 2016. Green agreed to pay £363m into the BHS fund a year later.

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