MPs urge Sir Philip Green to cover pension shortfall as Arcadia collapse nears
MPs have called on Sir Philip Green to cover a shortfall in the pension scheme of his troubled fashion retail empire Arcadia Group, as it teeters on the brink of collapse.
Stephen Timms, the head of the Work and Pensions Committee, called on the tycoon to stump up funds as he urged the Pensions Regulator watchdog to protect pension scheme members.
Timms also asked about the status of a £385m package that was agreed between the regulator, Arcadia and the group’s owner last year.
If the group, whose brands include Topshop, Dorothy Perkins, Evans, Wallis and Burton, enters administration, its pension scheme would be taken on by the Pension Protection Fund.
Arcadia’s pension deficit, which is estimated to be as much as £350m, raises risks that some workers could lose out. Timms called on the Green family to use their personal wealth to cover the shortfall.
He said: “There is unquestionably a moral case for the Green family to do the right thing and guarantee Arcadia’s hardworking staff what is rightfully theirs, whatever happens this Christmas.
“But the Pensions Regulator must also ensure that it is doing everything in its power to fight the corner of the pension scheme members.
“This is a crucial moment for the regulator to show that it has learned the lessons of previous corporate collapses, such as those of BHS and British Steel.”
The comments come as Mike Ashley’s Frasers Group confirmed an offer for a £50 million lifeline has been rejected.
In a statement to the London Stock Exchange, the company said: “Frasers Group can confirm that Arcadia Group Limited have declined Frasers Group’s offer of a lifeline loan of up to £50 million.
“Frasers Group were not given any reasons for the rejection, nor did Frasers Group have any engagement from Arcadia before the loan was declined.”
According to the BBC Arcadia Group will enter administration as early as today with Deloitte to be appointed as administrators in the coming days.
If the company does go down today, the UK taxman could also lose out. It would come ahead of new rules next month which would make HMRC a preferential creditor and improve its chances of securing substantial revenue from the retail group’s insolvency.
Prior to Ashley's offer, Arcadia had been in emergency talks with lenders in a bid to secure a £30m loan to help shore up its finances, however these talks are also believed to have collapsed.
If the insolvency is confirmed, it is expected to trigger a scramble among creditors to get control of company assets.
It is estimated that around £250m worth of supplier invoices to Arcadia could go unpaid if there is no rescue deal, according to insurance specialists Nimbla.
The company said this could have a ripple effect which could “threaten the existence of hundreds of small businesses and jobs” further down the supply chain.