Topshop owner faces collapse within hours
Topshop owner faces collapse within hours today. As Sir Philip Green’s retail empire Arcadia, which includes Topshop, Burton and Dorothy Perkins, could face collapse within hours unless the group receives 200 million this week.
The company is likely to enter administration on Monday, putting 13,000 jobs at risk.
The group had been seeking extra cash to help it plug the gap from lost sales during the Coronavirus pandemic.
The government believe Sir Philip Green is using the pandemic to save himself millions in the pension fund and investment payments. And if the group survive he will use it to restructure and downsize employees leveraging government financial support, quoting the example of how banks were bailed out in the 2008 financial crisis.
The collapse of Arcadia could also have a knock-on effect on Debenhams. It could scupper a potential sale of the department store chain to JD Sports.
Arcadia is the biggest concession in Debenhams, accounting for about £75m of sales.
Topshop has been strangled by Green
Sir Philip bought Arcadia Group, which also includes brands such as Evans and Outfit, in 2002. His wife, Lady Cristina Green, is the majority owner of its parent company Taveta Investments.
The couple are reported to be worth £930m, according to the Sunday Times Rich List.
This is not the first time Green has been under the cosh. His financial irregularities in the past have in the past led to calls for a fraud investigation against the retail tycoon, who has consistently had shortfalls in the pension funds of his companies.
Much of their wealth is derived from a £1.2bn dividend payment Sir Philip took from Arcadia and paid to his wife in 2005. Since Lady Green is a resident in Monaco, it was paid to her tax-free. Sir Philip Green managed to reach a last-minute deal with pension regulators offering to fulfil a £571m deficit by agreeing to pay £363m.
Mike Ashley offers a lifeline
Billionaire Mike Ashley’s Frasers Group wrote to Arcadia on Sunday saying it would offer an emergency loan of up to £50m to help with the group’s short-term cash-flow problems.
The letter also said that the Frasers Group would consider giving out the emergency cash on an unsecured basis – meaning Arcadia would not need to put up collateral, such as property, to guarantee it would be paid back.
However, the offer would be immediately withdrawn if the group, or any of its smaller brands, enters an insolvency process.