Green's Arcadia may file for insolvency as soon as Monday

[LONDON] Philip Green's Arcadia Group is poised to seek protection from creditors as soon as Monday and become the most notable UK retail insolvency since the beginning of the coronavirus pandemic.

The owner of brands including Topshop and Topman saw its sales decimated by forced store closures and, over the weekend, stepped up plans to file for administration, according to people familiar with the matter, who asked not to be named because the information is private. Arcadia's filing could put 13,000 jobs and 500 stores at risk.

Potential bidders are already circling. Mike Ashley's Frasers Group confirmed in a regulatory filing Monday that it had offered 50 million-pound (S$89.7 million) unsecured loan to Arcadia over the weekend "and is now awaiting a substantive response." It also said that if Arcadia does enter administration it "would be interested in participating in any sale process." Arcadia does not consider the Frasers loan offer a serious proposal and is still expected to file for creditor protection soon, the people said.

Arcadia is likely to carry out a so-called light-touch administration, where the existing management remains in place under the supervision of experts from Deloitte LLP, the people said. This means websites and stores under all the Arcadia brands will continue to operate as normal, most crucially through the vital Christmas period.

Representatives for Arcadia and Deloitte declined to comment.

Arcadia's administration would be the UK's highest-profile retail insolvency in a sector that has already lost more than 125,000 roles in the country since January. It would also mark a stratospheric fall from grace for Mr Green, who was once dubbed "King of the High Street." Arcadia would follow Debenhams, the struggling department-store retailer, which filed for the same type of proceedings in April, allowing the company to stay in business while seeking a buyer or fresh funding.

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Like most UK retailers, Arcadia has been struggling under coronavirus restrictions. A second lockdown in England put additional pressure on the company as it was forced to keep its stores closed throughout November.

On Friday, it said in a statement it was exploring "a number of contingency options" as Covid-19 "had a material impact on trading across our businesses." Even before the pandemic, retailers were grappling with high rents, increased competition and a rapid shift to online shopping. Last year, Mr Green's group carried out a company voluntary arrangement, another form of UK insolvency process, to close stores and slash rents in a bid to cut costs. The most recent filed accounts for Taveta Investments Ltd, the parent company of Arcadia, disclosed a 177 million-pound pretax loss for the year to Sep 1, 2018. Since then, market conditions have significantly deteriorated.

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