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Sir Philip Green’s retail empire is facing collapse in a few days, putting 15,000 jobs at risk and lowering the curtain on the career of one of Britain’s most controversial businessmen.
Sky News learned that the Arcadia Group, which owns TopShop, Burton and Dorothy Perkins, is preparing to appoint Deloitte trustees next week.
A retail industry figure said Arcadia’s collapse had become inevitable after talks with various lenders about a £ 30 million emergency loan ended unsuccessfully.
The appointment of administrators could happen on Monday, although a person close to the situation said the plan had not yet been finalized and could still be delayed.
If insolvency is confirmed, it is expected to trigger a fight between creditors to seize the assets of the company.
It would involve Arcadia’s online operations and stores that can open under lockdown restrictions to continue operating, according to a retail figure.
Arcadia’s pension plan is likely to have the biggest claim on Deloitte-generated income, and TopShop and TopMan, the most valuable brands in Sir Philip’s empire, are likely to be worth several hundred million pounds.
Bidders are likely to start surrounding TopShop right away, with Boohoo Group, the online fashion retailer, among potential suitors.
Some of Arcadia’s other brands are facing being picked up by struggling retail investors or, like prominent names like Cath Kidston, Oasis and Warehouse, becoming online-only fashion brands.
Sir Philip It is said that he is unlikely to attempt to buy back any of Arcadia’s business operations from the trustees.
Confirmation of the group’s management would come after a turbulent few years in which Sir Philip’s reputation was destroyed and his fortune diminished by the upheaval on Main Street and, more recently, the coronavirus pandemic.
Sir Philip advised then Prime Minister David Cameron on public sector waste
Arcadia employs about 15,000 people, having announced about 500 job cuts at head office earlier this year.
It has more than 500 independent sites, most of which are closed due to the second lockdown across England, which ends next week.
Most of the group’s employees have had their salaries subsidized by the taxpayer this year under the government leave scheme.
Depending on the outcome of an insolvency proceeding, a substantial proportion of those positions will be compromised.
Earlier this month, Sky News revealed that Arcadia had reached out to multiple lenders. on borrowing £ 30 million to avoid collapsewhile The Sunday Times reported that company directors were intensifying preparations for the appointment of administrators.
In response to that report, Arcadia said there was no imminent plan to appoint administrators.
The parties contacted about the emergency loan are said to have included Apollo Global Management, Secure Trust Bank, and White Oak, an asset-based lender.
The Arcadia collapse would crown one of the most spectacular implosions in recent corporate history.
Sir Philip bought the High Street group in 2002 for £ 850 million, and just three years later he paid what remains one of the largest dividends in history, £ 1.2 billion, to his wife and registered owner of Arcadia, Lady Tina Green.
For years, he was hailed as a street colossus, advising David Cameron on public sector waste during his tenure as prime minister.
In 2012, he sold a 25% stake in TopShop’s immediate holding to Leonard Green & Partners, a private equity firm, valuing the fashion chain at £ 2 billion.
Later, Sir Philip would buy it back for just $ 1.
His decision to sell the BHS department store chain in 2015 for £ 1 to Dominic Chappell, a former bankrupt who was recently jailed for tax evasion, set off a chain of events that cost Sir Philip his reputation and much of his fortune.
BHS collapsed just a year after that deal, sparking a bitter dispute over Sir Philip’s responsibilities to his retirees.
In early 2017, Sir Philip struck a deal with pension watchdogs to pay more than £ 360 million to the BHS scheme and that set the tone for negotiations on Arcadia’s retirement fund for two years. after.
Last year, the mogul narrowly won approval for a voluntary company deal in Arcadia, but was forced to promise an asset package worth more than £ 400 million for the company’s pension scheme.
Some of that funding could be compromised if Arcadia’s management is confirmed in the coming days.
It is understood that the Pensions Regulator and the Pension Protection Fund, as well as Arcadia’s lending banks, are kept closely informed about Arcadia’s plans.
If Arcadia collapses, he will be the last big street player to go bankrupt during a torrid 2020.
Debenhams called administrators in April and is in exclusive talks with JD Sports Fashion about a bailout deal, The Times reported this week.
A liquidation process is likely to start shortly if discussions fail.
Edinburgh’s parent company Woolen Mill, Jaeger and Peacocks has also appointed managers, putting thousands of jobs at risk.
Like their rivals, Arcadia brands have been affected by changing habits among shoppers and growing consumer caution, with the COVID-19 crisis.
Sir Philip’s miserable period has not been limited to the pursuit of his business interests.
He was also caught up in a storm over his behavior toward Arcadia employees and his use of nondisclosure agreements to prevent former workers from discussing their severance packages.
Arcadia did not respond to a request for comment on Friday.
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