Arcadia, Sir Philip Green’s fashion empire, is free to press ahead with its restructuring plan after resolving a legal challenge from American landlords.
The retail group behind Topshop, Burton and Dorothy Perkins said that after “significant dialogue” two US landlords had “agreed to withdraw their challenges”.
“With these legal challenges now withdrawn, all the components of the CVAs can now be implemented,” Ian Grabiner, chief executive, said. “We can now look forward to implementing our strategy and delivering our growth plan for the group.”
A CVA, or company voluntary arrangement, is an insolvency procedure that allows a company to close stores or pay reduced rent.
Arcadia did not reveal how the matter was settled. It is believed that Sir Philip reached out-of-court settlements with Vornado and Caruso, the two American landlords of Topshop stores in North America.
Steven Roth, 78, the billionaire chairman and founder of Vornado, New York’s biggest commercial landlord, was understood to be enraged by the CVA, which triggered the closure of all 11 US Topshop stores in an administration process without any consultation.
Vornado, owner of Topshop’s Fifth Avenue store, previously joined a suit with four other American landlords accusing Arcadia of depriving them of their contractual rights. They accused Arcadia of inflating the amount owed to non-property creditors, such as suppliers, to boost their voting power and weaken landlords’ position.
They also demanded more information on Arcadia’s corporate structure, which includes several company links and inter-company debt and some property owned by the Green family, but a US court dismissed their claim.
Sir Philip won approval for Arcadia’s CVA at a second vote on June 12, having postponed it for a week after failing to convince enough landlords and facing rebellion from the shopping centre owner Intu.
After a week of negotiations Sir Philip won over enough landlords by promising to give them a 20 per cent stake in the business and invest an extra £50 million in stores as part of a £135 million turnaround plan focused on reacting to online shopping. The CVA will close 23 British and Irish shops with landlords receiving half as much rent on some poorly performing stores. Property sources said the announced closures are the “tip of the iceberg” as the group will use future lease breaks to shut more struggling shops.
