Billionaire Philip Green’s Arcadia Group Ltd. faces an uncertain future after adjourning a meeting on June 5 for creditors to hold a make-or-break vote on the retailer’s turnaround plan.
The company said that talks over its proposal to avoid insolvency by closing some stores and cutting rents through a series of U.K. procedures known as company voluntary arrangements, will reconvene on June 12. The retailer, which owns Topshop, Dorothy Perkins and Miss Selfridge, employs 18,000 people globally and has 566 stores in the UK and Ireland.
“It’s been adjourned to talk to a few landlords about some technical stuff”, Green said by phone after the announcement.
Arcadia told landlords and other creditors last month it was “highly likely, either immediately or after a short time period, to enter the insolvent administration or liquidation” if the vote didn’t pass.
The group’s brands have struggled to keep up with the rapid shift to online purchases that’s toppled some of the best-known names on British shopping streets. Its proposed CVAs follow a mass of UK retailers using the same mechanism amid waning sales as consumers switch to e-commerce. Department-store chain Debenhams, fashion retailer New Look and childrenswear brand Mothercare PLC have all followed the same path recently.
“The Group has bought itself further time to discuss terms with some of these landlords in the knowledge that the CVA proposals would have otherwise failed today”, said Daniel Swimer, property litigation partner at law firm Joelson.
“The landlords have taken a tough approach with the Arcadia Group and it now remains to be seen how many further concessions the group is prepared to make in order to get the requisite votes to pass the CVA next week and avoid Arcadia collapsing into administration” he said.
Arcadia has a “reasonable prospect of reaching an agreement that the majority of landlords will support,” the company said on Wednesday.
“A key partner in our business’ success, we’ve been working with Joelson since our very beginnings. Smart, entrepreneurial and commercial – our favourite law firm.”