(Reuters) - Philip Green’s Arcadia fashion group adjourned Wednesday’s creditor meetings to vote on the struggling British retailer’s restructuring plan until June 12, seeking more time to win over disgruntled landlords and avoid a collapse into administration.
Green needs his restructuring proposals for each of Arcadia’s brands - Topshop, Topman, Burton Menswear, Dorothy Perkins, Evans, Miss Selfridge and Wallis - to be approved by creditors, including landlords, or the group, which employs 18,000, will likely be placed into administration.
His plan consists of seven Company Voluntary Arrangements (CVAs) that will close stores and cut rents.
“It is in the interests of all stakeholders that we adjourn today’s meetings to continue our discussions with landlords,” said Ian Grabiner, chief executive of Arcadia, after nearly five hours of meetings.
“We believe that with this adjournment, there is a reasonable prospect of reaching an agreement that the majority of landlords will support,” he added.
Arcadia’s landlords include British Land, Intu Properties, Aviva and Land Securities.
Arcadia said it had secured the support of its pension trustees, the Pensions Regulator and the Pension Protection Fund, as well as the backing of its trade creditors and “a significant number” of landlords.
Green’s plan involves closing 23 of Arcadia’s 566 UK and Irish stores, threatening 520 jobs, along with steep rent reductions and revised lease terms across 194 other locations.
It will also see Tina Green, Philip Green’s Monaco-based wife and Arcadia’s ultimate owner, invest 50 million pounds of equity into the group and provide affected landlords with the right to a pro-rata share of 20% of any equity value in the group from a future sale.
Landlords will also be able to claim from a 40 million pounds compromised creditor fund.
Arcadia will provide 210 million pounds of security over assets for its pension schemes to help close a funding deficit, while Tina Green would also contribute 100 million pounds to the schemes over three years.
Arcadia’s annual contributions to its pension schemes will be reduced from 50 million pounds to 25 million pounds for three years.
A string of British store groups have either gone out of business or announced plans to close shops over the last two years as they struggle with subdued consumer spending, rising labour costs and business property taxes, and growing online competition.
CVAs have been carried out by retailers including fashion chain New Look, floor coverings firm Carpetright, mother-and-baby goods group Mothercare and department store Debenhams.
“The landlords who voted against the (Arcadia) CVA are choosing to send a message that they will not pick up the bill for every failing retailer on the high street whilst the other creditors walk away unscathed,” said Stephanie White, a real estate expert at Stevens & Bolton.
Arcadia needs the support of more than 75% of unsecured creditors present to get the CVAs through.
Arcadia falling into administration would be the UK retail sector’s biggest casualty since the collapse of department store chain BHS in 2016. Green had sold BHS to a collection of little-known investors for a nominal sum of a pound the previous year.
Green, 67, became one of Britain’s best-known businessmen when he bought BHS in 2000, Arcadia in 2002 and twice tried and failed to buy Marks & Spencer.
He was knighted by Queen Elizabeth in 2006 for services to the retail industry and in 2010 the then prime minister David Cameron commissioned him to report on efficiency savings in government.
But his reputation was damaged by the collapse of BHS.
Last October Green was named in parliament as having taken legal action to try to prevent publication of allegations of sexual harassment against him, while last week he was charged with four counts of misdemeanor assault in the United States. He denies the allegations.
Reporting by James Davey in London, Maria Ponnezhath and Ishita Chigilli Palli in Bengaluru; editing by James Dalgleish, Louise Heavens and Jan Harvey