In frankly astonishing news for the High Street, it now appears that Arcadia Group is looking to use a Company Voluntary Arrangement (CVA) to restructure its retail estate.
The Arcadia Group is owned by controversial tycoon, Sir Philip Green and its main brands are Topshop, Miss Selfridges and Dorothy Perkins. The company has 570 stores and hundreds of concessions. This is a worrying time for employees and landlords - ok there is not much sympathy for landlords, but it is important as if the "king of the high street" can't pay the rents and rates, then the repercussions will be huge across the whlole retail sector. Business rates are due to increase in April as well.
The success of any CVA will depend on whether the landlords will support it. Also the pension regulator as they are understandibly worried about the company being able to pay its obligations to the pension scheme given the problems at BHS.
Arcadia has been closing stores as leases expire so they may look to accelerate this program by offering surrender terms.
The mere talking about a CVA is a way to soften up landlords to give rent concessions and the way that the law currently stands the landlords could lose out significantly. They may well challenge the CVA process if the feel are they are to be disproportionately affected. The House of Fraser CVA would have been looked at by the courts if the company had not gone into administration.
Arcadia issued a statement over the weekend that said: "“None of the options being explored involve a significant number of redundancies or store closures. The business continues to operate as usual including all payments being made to suppliers as normal.”
Categories: What is a CVA or Company voluntary arrangement?