Retail group Arcadia, owned by business tycoon Sir Philip Green, is reportedly close to collapse, putting around 13,000 jobs at risk and raising further questions around the safety of employees’ pensions.
It is thought that talks with potential lenders have fallen through and administrators could be appointed on Monday.
In a statement, the company said that the pandemic had had “a material impact” on trading across its businesses, which include Topshop, Burton and Dorothy Perkins: “As a result, the Arcadia boards have been working on a number of contingency options to secure the future of the group’s brands.
“The brands continue to trade and our stores will be opening again in England and the Republic of Ireland as soon as the government Covid-19 restrictions are lifted next week.”
One analyst, Susannah Streeter of Hargreaves Lansdown, said this could be “the biggest British corporate collapse of the pandemic” if the company enters voluntary liquidation.
The chain currently operates around 500 shops, most of which have been forced to close during lockdown restrictions on retailers. Non-essential shops in Tiers 1 and 2 can open from 2 December, but will need to remain closed in Tier 3.
Another high-street retailer Debenhams – which sells a number of Arcadia brands through its stores – is in talks to find a buyer and at risk of cutting thousands of jobs.
Arcadia placed many of its workforce on furlough during the first lockdown and this summer was accused of wrongly basing redundancy payments on furlough pay rather than contracted salary. It later agreed to pay staff full notice pay.
News of Arcadia’s potential collapse will also revive concerns around its troubled pension scheme.
Last year, the Pensions Regulator agreed that the company could halve its pension contributions from £50 million to £25 million annually if Green’s wife also agreed to pay instalments from her own wealth and there was a £25 million one-off payment.
However in March this year the company was reported to be looking for a delay to these contributions due to the financial pressures of Covid-19.
Sign up to our weekly round-up of HR news and guidance
Receive the Personnel Today Direct e-newsletter every Wednesday
If administrators are appointed next week, Arcadia’s pension scheme is likely to stake the biggest claim on the proceeds of any sale.
HR roles in retail and wholesale on Personnel Today
Browse more HR roles in retail and wholesale
