Deloitte appointed to Arcadia administration
1 Dec 2020
Matt Smith and Dan Butters, together with other restructuring partners at Deloitte, have been appointed as joint administrators to the Arcadia Group Ltd, and various subsidiary companies, as part of a trading administration
1 Dec 2020
Altogether, the Group is made up of eight of the UK’s best known high-street and fashion retail brands, including Top Shop, Wallis, Burton and Dorothy Perkins, and employs some 13,000 people.
This is the biggest high street casualty so far as a result of the Covid-19 impact.
A total of 9,294 employees were on furlough at the time of the appointment.
Deloitte said no redundancies are being announced today as a result of the appointment and stores will continue to trade. The Group operates from approximately 444 leased sites in the UK and 22 overseas.
The administrators will be honouring all online orders made over the Black Friday weekend and will continue to be operating all the existing sale channels of the business.
The current CVAs of a number of the Group companies will come to an end as a result of this appointment.
Ian Grabiner, CEO of Arcadia, said: ‘The impact of the Covid-19 pandemic including the forced closure of our stores for prolonged periods has severely impacted on trading across all of our brands.
‘Throughout this immensely challenging time our priority has been to protect jobs and preserve the financial stability of the Group in the hope that we could ride out the pandemic and come out fighting on the other side.
‘Ultimately, however, in the face of the most difficult trading conditions we have ever experienced, the obstacles we encountered were far too severe.’
Matt Smith, joint administrator and partner at Deloitte, said: ‘Arcadia sits at the heart of the high street, and has been striving to combat the impact of Covid-19 throughout this year.
‘Now the effect of the lockdowns, combined with broader challenges facing bricks and mortar retailers, have resulted in a critical funding requirement for the Group and today’s administration.
‘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.’
There have been reports that online specialists such as Boohoo or Asos may consider bidding for Top Shop, while entrepreneur Mike Ashley is also believed to be interested in buying some parts of the Group.
Arcadia has a £350m pension deficit, and Stephen Timms, chair of the work and pensions select committee, has written to the Pensions Regulator to highlight the importance of protecting the interests of Arcadia Group pension scheme members amid ongoing uncertainty about the future of the retail company.
The letter calls for clarity on the status of the £385m package previously agreed by the Pensions Regulator, Arcadia and the group’s owner Lady Green. It also asks what is being done to protect Arcadia scheme members from pension scammers and about the guidance on defined benefit superfunds.
Timms said: ‘‘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.
‘But the Pensions Regulator must also ensure that it is doing everything in its power to fight the corner of the pension scheme members.
‘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.
‘While staff will be worried about possible job losses, the Pensions Regulator must take firm and decisive action to protect them from fraudsters.’
In 2015 Sir Philip Green sold BHS to Dominic Chappell for £1. When the business failed a year later, a £571m hole was discovered in the company’s pension scheme.
Following acrimonious exchanges with regulators and MPs, Green made a payment of around £363m designed to enable the trustees of the BHS Pension schemes to achieve a ‘significantly better outcome’ than the schemes entering the Pension Protection Fund.