Arcadia to seek PPF approval for CVA

Arcadia owner Philip Green and his advisers are planning to propose a company voluntary arrangement (CVA) to financially restructure the retail group.

The plan would require approval from the Pension Protection Fund (PPF) to be introduced.

According to Sky News, Green is hoping to launch the restructuring within weeks, in a move that could involve a substantial number of store closures and job losses.

A CVA is an insolvency mechanism, agreed with a company’s creditors, to allow a proportion of its debts to be paid back over time, usually lasting three to five years.

Deloitte has been advising Arcadia on the proposed restructure, including the options available to protect its pension scheme and its members.

Green needs the approval of the PPF, as well as major retail landlords such as British Land, to follow in the footsteps of Carpetright, Mothercare and New Look, all of which have been approved CVA’s in the last 12 months.

Arcadia’s chief executive, Ian Grabiner, had reportedly indicated that the group was hoping to initiate the restructuring scheme in late April or early May.

In June 2018, the PPF published new guidance on the use of CVA’s, following a ‘marked increase’ in their adoption, in an attempt to protect companies’ pension scheme members.

It did, however, warn that CVA’s are not a quick fix and that experience has shown that financial issues facing the businesses often remain unaddressed and the employer could still go on to fail, as was seen with BHS and Toys R Us.

The Arcadia Group’s brands include Top Shop, Dorothy Perkins and Miss Selfridge and it has reportedly closed 210 shops over the last two years.

Arcadia has been contacted by Pensions Age for comment.

Deloitte declined to comment.

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