Sir Philip Green’s Arcadia retail empire collapsed into administration this evening, Monday November 30, putting 13,000 jobs and thousands of pensions at risk.
Arcadia Chief Executive, Ian Grabiner, said it was “an incredibly sad day for all of our colleagues. Ultimately, however, in the face of the most difficult trading conditions we have ever experienced, the obstacles we encountered were far too severe.”
Arcadia struggled when it was forced to close its 550 stores during lockdown, but the chain was already struggling in the face of a seismic consumer shift to online shopping and increased competition from other major high street fashion brands, including Zara, Primark, H&M and Asos.
There have been no immediate redundancies and Arcadia stores will continue to trade whilst a buyer or buyers are sought. Orders placed during the Black Friday sales will be shipped as normal.
There is now likely to be a bidding war for some of all of the company’s brands, which include TopShop, TopMan, Burton, Dorothy Perkins, Evans, Miss Selfridge, Outfit and Wallis.
Sport’s Direct tycoon, Mike Ashley, a long-term rival of Sir Philip Green, is thought to be considering an offer, alongside online retail giants Asos and Boohoo. Mr Ashley also offered a £50million loan to the business on Monday afternoon, which was rejected by Deloitte.
Deloitte has been appointed administrator for the stricken business, after last minute attempts to secure an emergency £30mn loan failed. Analysts have warned that around 10,000 savers could lose 10-20% of their income if the Arcadia pension scheme is forced into the Pension Protection Fund lifeboat due to a funding shortfall.
Arcadia has a pension deficit of £350m and Sir Philip Green is being called upon to fund the scheme from his own pocket, three years after he agreed to inject £363mn into the BHS retirement scheme. Lady Tina Green, the company’s actual owner, previously agreed to pump £100mn into pension schemes over three years, whilst Arcadia said it would add £75mn to the pot.
Chair of the work and pensions committee, Mr Timms, has asked the Pensions Regulator to do “everything in its power” to ensure Arcadia’s 10,000 pension scheme members are protected, commenting: “There is unquestionably a moral case for the Green family to do the right thing and guarantee Arcadia’s hardworking staff what is rightfully theirs, whatever happens this Christmas.
“This is a crucial moment for the Regulator to show that it has learned the lessons of previous corporate collapses, such as those of BHS and British Steel.”
Deloitte consultant, Matt Smith, said: “We will now work with the existing management team and broader stakeholders to assess all options available for the future of the Group’s businesses. It is our intention to continue to trade all of the brands, and we look forward to welcoming customers back into stores when many of them are allowed to reopen.
“We will be rapidly seeking expressions of interest and expect to identify one or more buyers to ensure the future success of the businesses. As Administrators we’d like to thank all of the Group’s employees, customers and business partners for their support, at what we appreciate is a difficult time.”
Arcadia’s insolvency plans were thought to have been brought forward because of a rule change that will come into effect tomorrow, December 1, that would move HMRC up the list of creditors. The taxman is now likely to miss out on millions as other creditors are paid first. Some £250million of invoices from suppliers are at risk of being unpaid according to insurance firm, Nimbla.
