Arcadia rescue faces US legal challenge
Philip Green’s plan to rescue his troubled Arcadia group from administration is facing a challenge from US property company Vornado, according to court papers filed in the UK.
The Topshop owner is the the process of trying to cut rents as part of a restructure process. Landlords and creditors last month voted to approve the reductions through seven Company Voluntary Agreements (CVAs).
Vornado is challenging two of the CVAs relating to Topshop and Topman stores.
Acadia chief executive Ian Grabiner on Tuesday dismissed the challenges as “without merit” adding that the retail group would “vigorously defend” itself.
Arcadia – which also owns Burton, Miss Selfridge and other high street brands – received backing from landlords for its restructuring plans last month.
The approval of the CVAs confirmed plans to close 23 stores, putting around 1,000 jobs at risk. A further 11 Topshop and Topman stores in the US were also earmarked for closure.
“The CVAs are a vital part of our restructuring, putting the business on a firm financial footing and enabling significant investment as part of our growth plans which will ultimately benefit all our stakeholders," Grabiner said.
“Our group continues to trade as normal and we remain focused on delivering our turnaround plans.”
Last month, a group of US property companies, including Vornado, contested Arcadia’s decision to put its US subsidiary into administration.
A new funding package for Arcadia’s pension fund, which is subject to completion of the CVAs, will also be put on hold until the challenge has been resolved. Green and Arcadia won support for its restructure from the Pensions Regulator, the group’s pension fund trustees and the Pension Protection Fund, an industry-backed lifeboat for collapsed companies’ savings schemes.
They only agreed to support the plan after Green’s wife, Tina, the official owner of Arcadia, agreed to pump £100m into the scheme over three years, alongside a £285m contribution in property assets and cash payments from the company itself once the CVAs are completed.