Arcadia facing collapse as pension deficit weighs heavily

TopShop, Burton and Dorothy Perkins owner Arcadia is on the brink of collapse, with its "horribly big" pension deficit "weighing down" on the company.

As reported by Sky News the high street retail giant, which is owned by Sir Philip Green, could appoint administrators from Deloitte as early as next week and quoted a retail industry figure as stating that the collapse had become inevitable after discussions with lenders about an emergency £30m loan ended in failure.

The company's collapse would put as many as 15,000 jobs at risk.

Its report stated that Arcadia's pension scheme was likely to have the most significant claim on proceeds generated by the administrators, adding that high-street fashion brands TopShop and TopMan were still thought to be worth hundreds of millions of pounds.

The Pensions Regulator and Pension Protection Fund (PPF) are working with the directors and scheme trustees on proceedings.

Speaking to Sky News, AJ Bell investment director, Russ Mould, said Arcadia was a “special case” as it had underinvested in the shift to online retailing and had a “horribly big pension deficit that has been weighing down for a considerable period of time and limiting its room for financial manoeuvre”.

He added that the company’s pensioners would likely end up in the PPF, adding that there could be some form of “settlement extracted along those lines”.

However, he warned that as “most of the brands have not been profitable for a long time”, along with the pension issues.

The company’s pension scheme has been under threat for years, with Arcadia only saving its pension scheme from entering the PPF by having seven company voluntary arrangements (CVA) approved by creditors in June 2019.

However, Arcadia Group moved to suspend its £2m monthly contributions to its pension scheme back in March, in an effort to retain cash during the coronavirus crisis.

TopShop owner Sir Philip Green, husband of Arcadia’s registered owner, has previously been accused of shirking his responsibilities towards pensioners after selling BHS to Dominic Chappell for £1 in 2015, only for the retailer to collapse a year later with a pension deficit of £571m.

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