Unsecured creditors in Arcadia are likely to receive a return of about 10p-15p in the pound against their outstanding claims, according to the latest report from the administrators of the failed fashion group.
However, they cautioned that the ultimate level of distributions to unsecureds — mostly suppliers, local authorities, utilities and landlords — would “depend on final asset realisations and the level of creditor claims ultimately received”.
Unsecured claims against Arcadia are estimated at £17m but this does not include the claims of HM Revenue & Customs — which will not rank as preferential because administrators were appointed the day before so-called “crown preference” began — and the eventual total is likely to be “substantially 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 Wallis.
Deloitte was appointed administrator in November 2020 after the prolonged first Covid-19 lockdown compounded difficult trading. The firm’s insolvency practice was subsequently sold to Teneo, which continues to oversee the liquidation of the group.
Although the administration was complex because of the number of entities involved and the amount of intercompany indebtedness, the high level of freehold property and the remaining brand value of Topshop in particular meant asset realisations were considerable.
In most administrations, the unsecured creditors receive little or nothing after higher-raking claims have been settled.
The prospects for creditors of other Arcadia group companies are less certain. At TSTM Opco, operator of the Topshop and Topman brands that were once the jewels in Green’s retail crown, Teneo would say only that “it is likely” unsecured creditors will receive a dividend.
The Topshop brand was sold to online retailer Asos for £265m, while property assets such as a distribution centre 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 £378m.
However, much of this cash was used to repay secured debt due to other group entities and external lenders.
Arcadia’s defined benefit pension scheme was among the secured creditors and has now received almost all the £185m pledged to it under a funding agreement reached in 2019. But the remainder of its £210m claim is unsecured and recovery prospects are less certain.
Arcadia’s unsecured creditors set for modest return
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