Philip Green, chairman of the UK’s Arcadia Group, has received the support of pension regulators for his plan to rescue his beleaguered retailer after agreeing to inject an additional £25 million into the retailer’s pension fund, on top of previous commitments of £360 million.
The Pension Protection Fund (PPF) and The Pensions Regulator (TPR) said they now support Arcadia’s company voluntary arrangement (CVA), which includes contributing £385 million to secure its pension plans. The backing comes despite TPR having recently demanded an additional £50 million from Green.
In response to the request for another £50 million, Arcadia Group handed security over additional property assets to the pension plan.
“We recognize that the best support for any pension scheme is a trading employer and we feel the CVA proposals now provide the right balance between security for the pension schemes and the chance of sustainability for the company,” said TPR, according to BBC News.
Arcadia Group has more than 560 stores in the UK and Ireland, and has roughly 22,000 employees. The company owns retailers Topshop, Topman, Wallis, Evans, Burton, Miss Selfridge, Dorothy Perkins, and Outfit. The defunct BHS chain was also part of the group. The company’s pension plans have an estimated £565 million shortfall.
The CVA, which includes shuttering nearly 50 of its retail stores, still needs the support of the stores’ landlords, who would have to agree to a reduction of rent.
The company’s creditors are expected to vote on the CVA on June 5. If the creditors, and landlords do not back his proposals, the retailer could become insolvent and be put under the management of licensed insolvency practitioners and go into administration.
The firm initially announced 23 stores would close as part of the rescue deal before it was revealed that another 25 stores would be added to that under separate insolvency proceedings.
Under the CVA, the company proposes to cut rent by up to 70% at 194 locations to facilitate a recovery. Green has offered the landlords a 20% stake in the company as an incentive, and has also promised that he will invest an additional £50 million into the stores.