Sir Philip Green’s rescue restructure of his Topshop-to-Burton retail empire is under threat from a US property group’s legal challenge.

New York-based Vornado has filed papers at the high court challenging two of the seven restructuring deals approved by Arcadia’s creditors last month. Vornado is the landlord of Topshop’s Broadway and Fifth Avenue stores, which were closed after Arcadia’s US arm went into administration last month.

Arcadia, which employs about 17,000 people and owns Dorothy Perkins, Miss Selfridge, Evans, Topman, Wallis and Outfit as well as Topshop and Burton, has seen sales and profits slide amid rising competition and costs as well as years of under investment by Green.

The former billionaire’s retail empire staved off collapse last month after winning the backing of creditors for a rescue plan that involves the closure of 50 of its 570 stores and 1,000 job losses.

The plan involved seven company voluntary arrangements (CVAs), which are insolvency procedures that have been used to shut stores by a growing number of high-street retailers, including New Look, Debenhams and Mothercare.

Ian Grabiner, chief executive of Arcadia Group, said: “These challenges are entirely without merit and we will vigorously defend them.

“The CVAs are a vital part of our restructuring, putting the business on a firm financial footing and enabling significant investment as part of our growth plans which will ultimately benefit all our stakeholders. Our group continues to trade as normal and we remain focussed on delivering our turnaround plans.”

Vornado was among a group of landlords which recently lost an attempt to challenge Arcadia’s restructuring plans in the New York bankruptcy court, where they argued they had been “frozen out” of the process. The US court ruled that the landlords could submit their claims in the UK.

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The challenge has not delayed Arcadia’s plans to cut rent or close stores even though these actions may have to be unwound if Vornado wins in court.

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A new funding package for Arcadia’s pension fund, which is reliant on completion of the CVAs, will also be put on hold until the challenge has been resolved.

Green and Arcadia won support for its restructure from the Pensions Regulator, the group’s pension fund trustees and the pension protection fund, an industry-backed lifeboat for collapsed companies’ savings schemes.

They gave their support after Green’s Monaco-based wife, Tina, who is the official owner of Arcadia, agreed to pump £100m into the scheme over three years, alongside a £285m contribution in property assets and cash payments from the company itself once the CVAs are completed.



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