Sir Philip Green’s Arcadia group is facing a court battle over its plans to reduce rents through its series of CVAs.
Landlords and creditors had previously voted to approve a raft of rent cuts to secure the future of the Topshop owner’s retail empire. However, US property giant Vornado is now challenging two of the seven Company Voluntary Agreements (CVAs).
The legal challenge by the New York-based property group concerns the two CVAs relating to Topshop and Topman stores.
Arcadia chief executive Ian Grabiner has dismissed the challenges, describing them as “without merit” and said Sir Philip’s group would “vigorously defend” itself.
Arcadia – which also owns Burton, Miss Selfridge, Evans, Outfit and Wallis – received backing from landlords for its restructuring plans last month at a delayed creditors’ vote.
It meant that landlords would receive smaller amounts of rent on certain properties, with some reduced to half the original price. The approval of the CVAs confirmed plans to close 23 stores, putting around 1,000 jobs at risk.
Another 11 Topshop and Topman stores in the US were also earmarked for closure.
Grabiner said: “These challenges are entirely without merit and we will vigorously defend them. 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.”
Last month, a group of US property companies, including Vornado, contested Arcadia’s decision to put its US subsidiary into administration.
The landlords reportedly claimed that Arcadia “manipulated and gerrymandered” its CVA in the UK to affect the “complete forfeiture and deprivation” of their rights.