Thu. Jan 27th, 2022

Unsecured creditors in Arcadia are likely to receive a return of around 10p-15p in pounds against their outstanding claims, according to the latest report from the administrators of the failed fashion group.

However, they warned that the final level of payments to uninsured – mostly suppliers, local authorities, utilities and landlords – “will depend on final asset realizations and the level of creditor claims eventually received”.

Unsecured claims against Arcadia are estimated at £ 17 million, but that does not include the claims of HM Revenue & Customs – which will not be considered preferable because administrators were appointed the day before the so-called “crown preference” began – and the ultimate total is likely to be “significantly higher”.

Arcadia was the holding company for Sir Philip Green’s fashion empire, which included brands such as Topshop, Burton, Miss Selfridge, Dorothy Perkins and Wales.

Deloitte was appointed administrator in November 2020 after the prolonged first Covid-19 restriction exacerbated difficult trade. The firm’s insolvency practice was subsequently sold to Teneo, who continues to oversee the liquidation of the group.

Although the administration was complex due to the number of entities involved and the amount of inter-company debt, the high level of freehold property and the remaining brand value of Topshop in particular meant that asset realizations were significant.

In most administrations, the unsecured creditors receive little or nothing after higher claims have been settled.

The outlook for creditors of other Arcadia group companies is less certain. At TSTM Opco, an operator of the Topshop and Topman brands that was once the jewel in Green’s retail crown, Teneo would just say that “it’s likely” uninsured creditors will receive a dividend.

The Topshop brand was sell to online retailer Asos for £ 265 million, while real estate assets such as a distribution center in Daventry and a prominent building on Tottenham Court Road in London’s West End also fetched high prices. The Topshop store at Oxford Circus was sold to Ikea last October for £ 378 million.

However, much of this cash has been used to repay secured debts to other group entities and external lenders.

Arcadia’s defined benefit pension scheme was among the insured creditors and has now received almost all the £ 185 million owed to it under a funding agreement reached in 2019. But the rest of his £ 210 million claim is uninsured and recovery prospects are less certain.

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