Arcadia collapsed with debts of £750m

Topshop Topman Oxford Street
Topshop & Topman, Oxford Street © TheIndustry.fashion

Sir Philip Green’s retail empire Arcadia collapsed with debts of £750m, it has been reported.

According to The Telegraph, which has seen the report from administrator Deloitte, Topshop and Topman failed with gross liabilities of more than £550m, while multibrand chain Outfit had debts of £80m.

Deloitte has said it intends to keep creditors up to date with its findings but has warned the final extent of the debt could be much higher as it gathered more information.

The report does not include how Arcadia’s pension holders will be affected by its collapse, nor how much the company owes HMRC.

Creditors to Topshop and Topman have been hit to the tune of £82.2m so far with landlords and overseas factories among the hardest hit.

The news breaks a day after it was revaeled that Topshop and Topman, along with the Miss Selfridge and HIIT brands, are likely to go to online fashion group ASOS, which is in exclusive talks to acquire them having reportedly bid in excess of £250m.

While ASOS is unlikely to take the brands’ store estate, it has been suggested that the group is interested in securing the lease for Topshop’s flagship on 214 Oxford Street, which is considered to be a strategically important store.

JD Sports, which this morning revealed it was considering a share placing (thought to be in the region of £400m) to fund future acquisitions, is said to be waiting in the wings with a joint bid in partnership with US group Authentic Brands, should the ASOS deal not go ahead as expected.

Before Christmas Deloitte sold the plus size brand Evans to Australia’s City Chic Collective for £23m in a deal that did not include its retail stores.

That leaves Wallis, Dorothy Perkins and Burton still looking for homes with names cited as potential purchasers including Marks & Spencer, Boohoo (which lost out on Topshop but yesterday secured a deal to buy the Debenhams brand and website) and Mike Ashley’s Frasers Group.

214 Oxford Street is being marketed separately from the Topshop and Topman brands and the sale of the lease is being handled by KPMG, which is acting as the administrator for Redcastle (214 Oxford Street) Limited, the property owning subsidiary of Arcadia Group.

Apollo Global Management provided Arcadia with a £310m four-year senior loan secured against the building in December 2019. At that point the site was valued at around £400m.

It is understood that the Arcadia pension fund would benefit from any potential sale proceeds from the flagship site that generated over and above the £310m loan value.

In a deal with the Pensions Regulator last year, trustees of Arcadia’s pension schemes were granted security over £210m of its assets – giving them a claim on any money recovered now that the company has collapsed.

However the security linked to some of Arcadia’s buildings has fallen in value as the COVID crisis has hit the property market.

Prior to its collapse, Arcadia had around 450 stores and employed 13,000 staff. Given the break-up of the business and the profile of the buyers, it appears that very few of those jobs will be salvaged.