Arcadia collapse leaves it with GBP 510 million pension deficit

By guest author Sahar Nazir from Retail Gazette

  • Arcadia owed creditors GBP 800 million when it called in administrators from Deloitte
  • Creditors are likely to receive only a small portion of the money owed
  • Arcadia Group had a pension deficit of GBP 510 million at the time of its collapse

Sir Philip Green’s Arcadia Group reportedly had a pension deficit of £510 million at the time of its collapse in November – which is about GBP 150 million more than expected.

Caption courtesy by Retail Gazette

In total, the former parent company of Topshop, Dorothy Perkins, Burton and Miss Selfridge, owed creditors GBP 800 million when it called in administrators from Deloitte.

Arcadia Group fell into administration last year, putting up to 12000 jobs at risk at the time.

Asos snapped up Arcadia fascias Topshop, Topman, Miss Selfridge and athleisure brand HIIT for £330 million earlier this month, while Boohoo bought Dorothy Perkins, Wallis and Burton for GBP 25.2 million.

Trade creditors, including fashion and shop fitting suppliers, were owed GBP 163 million and landlords GBP 36.5 million, while tax authorities lost out on GBP 44.2 million, The Guardian reported.

Creditors are likely to receive only a small portion of the money owed.

The Green family’s Aldsworth Equity is set to receive a GBP 50 million payout. The money is owed on an interest-free loan Aldsworth made to the group in 2019 at the time of an emergency restructure.

Trustees of the pension scheme said that they had since received GBP 180 million of funds from the sale of Arcadia assets – up from slightly on last week – as part of GBP 210 million in secured funds agreed under a 2019 deal between the pensions regulator and the Green family.

Earlier this week, it was reported that Topshop and Topman creditors are facing losses of £176 million as Arcadia Group is wound up.

Suppliers based in countries such as China and Turkey and property owners are hit the hardest by the demise of the fashion empire.

Creditors are owed GBP 219 million in total but there are only GBP 42.4 million of assets available to pay them – which means they are likely to miss out on GBP 176 million.

Gift card holders have also been left GBP 4.5 million out of pocket.

“However this value does not take into account the GBP 210 million Security granted to the Schemes as part of the 2019 CVA Settlement and the further recoveries which are expected as part of the administration process.

“The assets forming the Schemes’ Security are being sold as part of the administration process and GBP 180 million has already been paid to the Schemes.

“As other assets are realised, the Schemes will receive additional payments, which will further reduce the Schemes’ deficits.”

Administrators had previously estimated in November that GBP 82.2 million was owed to creditors when Arcadia collapsed.

A spokesman for the Arcadia Pension Schemes said: “The deficit quoted is the difference between the value of the Schemes’ assets and the cost of buying-out all members’ benefits with an insurance company.