Arcadia falls into administration putting 13,000 jobs at risk – as it happened

Right, time to wrap up.

Philip Green’s career as the one-time king of the high street has come to a shuddering end tonight, as his Arcadia group fell into administration.

The move puts 13,000 jobs at risk, and raises fears that its pension scheme could end up in the UK’s PPF lifeboat, meaning painful losses of at least 10% for savers.

Deloitte were appointed as administrators for the group, after attempts to raise fresh funding in recent weeks failed. Arcadia rebuffed a £50m ‘emergency loan’ from Mike Ashley’s Frasers Group.

No jobs have been lost, yet, across Arcadia’s brands, which include Topshop, Topman, Miss Selfridge, Evans, Wallis, and Dorothy Perkins. Stores should remain open, or reopen in England later this week after the lockdown ends.

Deloitte say the latest lockdowns have created a ‘critical funding requirement’, and hope to find more than one buyer for Arcadia’s businesses.

Analysts have predicted that the group could be broken up, with brands cherrypicked by more successful rivals such as online clothes retailer boohoo - leading to high street closures and job losses.

Arcadia’s collapse comes 15 years after Green awarded his family a huge pay out, through a £1.2bn dividend that help finance their Monaco lifestyle, luxury yachts and multimillion pound parties.

It has also rekindled memories of the collapse of BHS, which prompted Green to close its pension deficit amid calls to remove his knighthood.

Labour MP Stephen Timms, who chairs the work and pensions committee, has urged the Green family to follow their ‘moral obligation’ to workers, and tackle the deficit in the pension scheme.

Business minister Alok Sharma says Arcadia’s failure is ‘incredibly sad’ news.

Perhaps significantly, Sharma also pledged to keep a ‘very close eye’ on the administrators report on the conduct of Arcadia’s directors....

Within 3 months, the Administrators have a duty to file a report on director conduct with The Insolvency Service - who will then determine whether a full investigation is required.

I will be keeping a very close eye on this process.

Here are our latest stories on the collapse of Arcadia.

Goodnight. GW

The collapse of Philip Green’s British fashion group Arcadia was “incredibly sad news” but the government will support those affected, business secretary Alok Sharma has tweeted.

Sharma also points out that the administrators have a duty to file a report on director conduct with The Insolvency Service within three months, which will then determine whether a full investigation is required.

Sharma says he will keep a ‘very close eye’ on this process....

Arcadia’s collapse makes it onto the front pages of several of tomorrow’s newspapers.

The focus, understandably, is on the 13,000 jobs at risk, and worries about the state of Arcadia’s pension scheme.

The Guardian points out that retail tycoon Philip Green’s high street career ends in failure.

The Telegraph warns that thousands of pension savers face “a brutal hit to their retirement income”, should Arcadia’s pension scheme end up in the PPF lifeboat

The FT says Green’s Arcadia fashion empire has become the highest-profile retail victim of the pandemic.

The Times flags up concerns that Arcadia’s collapse could derail efforts to rescue Debenhams (as explained here)

Here’s retail analyst Paul Mitchell on Arcadia’s collapse tonight:

The UK’s tax authorities could miss out on substantial revenue because Arcadia collapsed tonight rather than surviving until tomorrow, points out Oliver Shah, business editor at The Sunday Times.

From Tuesday, these new Crown Preference rules will put HMRC ahead of unsecured creditors in an administration, and also ahead of those with ‘floating charges’ on assets such as stock.

That would increase HMRC’s chances of recovering VAT, national insurance and income tax owed, which could be substantial for a large company like Arcadia, at the expense of, for example, its suppliers.

Sir Philip Green’s Arcadia Group has collapsed into administration, putting 13,000 jobs at risk as the retail tycoon’s high street career ends in failure, my colleagues Joanna Partridge and Sarah Butler write.

The owner of household names including Topshop, Topman, Miss Selfridge, Dorothy Perkins, Evans and Burton appointed administrators from Deloitte on Monday.

No immediate redundancies were made as a result of the appointment and the group’s stores and websites will continue to trade. The move will protect Arcadia from creditors while a buyer is sought for all or parts of the company. Green, 68, is not expected to bid for any of the assets.

Arcadia’s management will retain day-to-day control of the business under the light-touch trading administration, the same process operating at the troubled department store chain Debenhams.

Ian Grabiner, the chief executive of Arcadia, said: “This is an incredibly sad day for all of our colleagues as well as our suppliers and our many other stakeholders.

“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.”

Arcadia stores will reopen in England on 2 December when the coronavirus lockdown is lifted....

Our financial editor, Nils Pratley, makes a strong case for the Green family to do the right thing, and cover the shortfall in Arcadia’s pension scheme:

The main reason why a deficit in the pension fund has persisted over years is that the Greens extracted their famous £1.2bn dividend from Arcadia in 2005. The payment weakened the company’s balance sheet and undermined its ability to make catch-up pension contributions in leaner trading years.

The good news, possibly, is that the gap may turn out to be smaller than the publicised £350m. The fund also has some claims on Arcadia’s properties and administrators may be able to raise a few quid for unsecured creditors. The financial arithmetic may not become clear for many months.

But it’s not too early for Green to announce his intentions. It’s impossible to know the precise state of his personal finances but anybody collecting £1.2bn in tax-free form in 2005 would be disappointed not to have doubled their capital over 15 years, especially if they stuck to familiar investment territory such as property assets. One must assume Green still has the ability to write very large cheques if he wishes.

Whatever the legal wrinkles, the honourable course should be clear: guarantee the retirement entitlements of 10,000 scheme members in full. Pensions are deferred wages, in effect. Arcadia’s owner for the past 18 years should not plead poverty from the deck of a large motor yacht.

Here’s our timeline of Philip Green’s career, from early days running a Mayfair discount store to the collapse of his retail empire tonight:

(including takeovers, the biggest payday in UK corporate history, a knighthood, luxury yachts and parties.... then the downturn in trading, the collapse of BHS, rising pension deficits, MPs voting to remove the knighthood, and finally the pandemic.)

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Arcadia’s collapse into administration is an ignominious end to Sir Philip Green’s long career as a retail tycoon, points out Reuters tonight.

At the start of the millennium, Green was dominating British retail through deals to buy British Home Stores, then Arcadia - and two failed attempts to get Marks & Spencer too.

At his peak, Green was even honoured with a knighthood for his ‘services to retail’ (an award that looked increasingly ill-fitting as problems at BHS, then Arcadia, mounted).

As Reuters’ James Davey writes, Green was ‘riding high’ for years.

He was knighted by the Queen, feted by Prime Ministers Tony Blair and David Cameron, and rubbed shoulders with A-listers like supermodel Kate Moss and actor Sylvester Stallone.

Based in Monaco, home of the super-rich, he was oft snapped by paparazzi on his 100-million-pound superyacht, Lionheart, and even hired Beyonce to perform at his son’s bar mitzvah bash.

But Arcadia failed to adapt to fast fashion (Primark, H&), or to online (ASOS, boohoo), before the BHS debacle. He sold BHS for a £1 to former bankrupt Dominic Chappell - it went bust a year later, costing 11,000 jobs and leaving a pension black hole.

Reuters calls this the ‘hammer blow’ to Green’s reputation.

Lawmakers branded him the “unacceptable face of capitalism”, saying his greed and disregard for corporate governance led to the company’s demise.

They called for him to be stripped of his knighthood, while newspapers vilified and lampooned him as a fat-cat tycoon.

After the pensions regulator pursued him, Green wrote a cheque for 363m pounds in 2017 to help plug the BHS pensions fund hole.

But his reputation was irreparably damaged, and further tarnished when he was named in Britain’s parliament as having taken legal action to try to prevent publication of allegations of sexual harassment by him against Arcadia staff. He denies the allegations.

West Midland Mayor Andy Street (who used to run John Lewis), reminds us that Arcadia was once a ‘retail superpower’.

Street is also concerned about the future for Arcadia’s pension scheme, which has a deficit estimated at £350m.

As we reported earlier today, Work and Pensions committee chair Stephen Timms says the Green family have a “moral obligation” to those pensioners to plug the shortfall.

Timms has also written to to the Pensions Regulator seeking details on the status of the £385m package agreed between the regulator, rcadia Group and Lady Green last year.

But former pensions minister Ros Altmann has predicted that Arcadia’s scheme will end up in the UK pension lifeboat, the PPF. If that happens, those below retirement age would lose some of their entitlement (she estimates 10% to 20%).

Arcadia’s future had been uncertain for a couple of weeks, since Sky News reported that it was looking to borrow £30m to prop up the business.

Professor John Colley, Associate Dean of Warwick Business School, argues that Sir Philip Green could have provided more funding himself, rather than letting the group fall into administration.

But, after a long downward spiral, the end has arrived.

“If reports are to believed, Arcadia has gone into administration for the want of £30m. Sir Philip Green clearly does not feel it is worth funding that from his £1.7 billion fortune to save his reputation.

“Perhaps the various accusations of bullying and sexual harassment [which Green denies], dumping pension fund liabilities by selling BHS for a £1, and the recent creditors voluntary arrangement (CVA) has brought him to this point. CVAs rarely work for long and this looks to be no exception. They are usually just a stage on the path to administration.