// Arcadia’s CVAs challenged by US property group
// Arcadia has already gained the backing to push ahead with its seven CVAs as part of a turnaround
// The CVAs covering Arcadia Group & Topshop Topman have been challenged by two legal entities of US property firm Vornado
Arcadia Group has pledged to fight a legal challenge that has been launched a US property firm pertaining a couple of its CVAs.
The retail giant said it has received applications from the two legal entities of US property company Vornado – 480-486 Broadway LLC and TMO 1 LLC – to challenge the CVAs pertaining Arcadia Group and Topshop Topman.
Arcadia already gained the majority support required from creditors for seven CVAs proposals last month, as part of a major restructuring plan to turnaround the Sir Philip Green-owned company.
In response to the legal threat, Arcadia chief executive Ian Grabiner pledged to fight Vornado.
“These challenges are entirely without merit and we will vigorously defend them,” he said in a statement.
“The CVAs are a vital part of our restructuring, putting the business on a firm financial footing and enabling significant investment as part of our growth plans, which will ultimately benefit all our stakeholders.
“Our group continues to trade as normal and we remain focused on delivering our turnaround plans.”
Arcadia operates 11 Topshop stores in the US, including New York, Miami, Las Vegas and Chicago.
Vornado was initially among the group of US landlords that last month filed an objection in a New York bankruptcy court, in which they accused Arcadia of “engaging in a convoluted scheme to deprive the… US landlords of their bargained-for contractual rights by manipulating and exploiting a private, little-used out-of-court process in the UK known as a company voluntary arrangement” (CVA).
The group of landlords also allege to have lost more than £100 million as a result of Arcadia’s closure of its US business.
Meanwhile, Arcadia’s hard-won restructure plan will mean 170 of its 2600 employees at its head offices across its Topshop, Topman, Evans, Wallis, Miss Selfridge, Burton and Dorothy Perkins chains will lose their contracts.
That’s on top of roughly 1000 employees who will lose their jobs as part of the 50 store closures being implemented under the seven CVAs.
Rent reductions will be sought on another 200 stores.
Arcadia’s CVAs mean the company avoids administration, which would have put 17,000 of its employees’ jobs at risk.
Arcadia has commenced the redundancy consultancy process.