Arcadia’s pension deficit in the spotlight as CVA rumours grow

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Arcadia pension
// Sir Philip Green may be forced to increase payments into Arcadia pension scheme
// Arcadia is in the process of exploring options, and could launch a CVA next month
// A CVA needs approval from creditors, including the Pension Protection Fund
// Arcadia’s pension deficit was estimated to be £1 billion in 2016

Sir Philip Green may need to increase payments to the pension scheme of his Arcadia Group retail empire amid growing speculation that he is mulling a CVA.

The news, reported by The Telegraph, comes after Arcadia drafted property advisers GCW for representation during discussions with landlords across its store estate.

The parent company of Topshop and Dorothy Perkins had already appointed Deloitte to carry out a review of the business, and is reportedly considering a restructuring scheme that could be launched early as next month.

Speculation is rife that this could be in the form of a CVA, although this would need approval from creditors such as landlords and the Pension Protection Fund.

According to The Telegraph, should a CVA eventuate, Green may be forced to step up payments into Arcadia’s pension scheme in exchange for votes to approve it.

In 2016, Arcadia’s pension deficit was estimated to be £1 billion.

A CVA would allow Arcadia, which also owns Evans, Wallis, Burton and Miss Selfridge, to close down stores, make redundancies and seek rent reductions in order to stay afloat.

Other household name retailers to have launched CVAs in the past year include New Look, Mothercare and Carpetright.

Earlier this month, a spokesman from Arcadia Group confirmed that the company was in the process of “exploring options” but denied it would lead to a significant number of store closures or job losses.

There was also no mention of a CVA.

“Within an exceptionally challenging retail market and given the continued pressures that are specific to the UK high street we are exploring several options to enable the business to operate in a more efficient manner,” the spokesman said.

“None of the options being explored involve a significant number of redundancies or store closures.

“The business continues to operate as usual including all payments being made to suppliers as normal.”

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