Topshop Bankruptcy Crisis Temporarily Breaks 17 Thousand Employees To Save Their Livelihood

The restructuring plan of Topshop's parent company Arcadia Group Ltd. won enough creditors' support at the last minute before voting this week, not only to ease the bankruptcy crisis, but also to save 17 thousand employees.

Arcadia Group Ltd.'s seventh largest brand The seven "Company Voluntary Arrangement" (the company's voluntary agreement, hereinafter referred to as "CVA") has been approved by more than 75% of the creditors, including the pension trustee, the store owner and the supplier. Next, the group will close 23 shops in 566 stores in the UK and Ireland according to the CVA plan, get rid of about 500 related posts, and the rent of 194 other stores will enjoy 30%-70% reduction.

As one of the conditions, Arcadia Group Ltd. boss Philip Green Philip Green's wife Cristina Green Christina Green agreed to invest an additional 100 million cash to the industry pension insurance scheme Pension Protection Fund (pension fund, hereinafter referred to as "PPF"). In the next three years, the group will also inject 75 million pounds into the pension to reduce the pension deficit and provide a total of 210 million pounds of asset pledge.

Arcadia Group Ltd. chief executive Ian Grabiner said in a statement that she was "very grateful to creditors for supporting the CVA plan" and claimed that "the future of Arcadia, our thousands of employees and the external supply chain can now stand firm."

The vote was originally scheduled for last Wednesday, but the management announced the adjournment after clearing the situation that it could not get enough store owners' support. On Friday, it amended the terms urgently, and decided to subsidize the owners 9 million 500 thousand pounds every year in the next three years, which is equivalent to reducing the rent reduction to 25%-50%. On this basis, Philip Green promises that if the group's future sale will give the owners 20% proceeds, it will also invest 50 million in cash for the renovation of the stores and the upgrading of the digital business infrastructure.

One day before the vote this week, British media revealed that Arcadia Group Ltd., the second largest store owner, and Intu Properties PLC (INTU.L), a commercial real estate developer in the UK, including 17 shopping centers in Manchester, including Trafford Center, still rejected the group's huge rent reduction requirements.

A spokesperson for Intu Properties PLC issued a statement in response to the CVA results, saying that the group "firmly believes that the CVA clause of Arcadia Group Ltd. is unfair to other tenants who pay full rent, nor is it in the interests of other stakeholders."

Arcadia Group Ltd. competitor New Look, carpet retailer Carpetright PLC (CPR.L), mother and baby products retailer Mothercare PLC (MTC.L) and department store have been rapidly getting rid of a large number of loss stores in recent two years. Analysts pointed out that some owners now want to show that they are not using Arcadia Group Ltd. to signal the failure of all the losers in the high street. These owners believe that they are making great losses under the current mechanism, while other creditors are no harm at all.

Additional restructuring measures will also close 25 other stores and reduce 500 related jobs. In addition, the Arcadia Group Ltd. flagship brand Topshop and Topman's us direct business has filed for bankruptcy last month under the fifteenth chapter of the bankruptcy law, and the 11 independent stores have been closed. Only the luxury store department Nordstrom Inc. (NYSE:JWN), the Topshop/Topman shop in the Neth dragon, and the American website of the brand will continue to operate. Australia's business has also been closed in recent weeks, leaving only one store left.

On the following day after the CVA crisis, Arcadia Group Ltd. will officially reduce the 170 posts of London Group headquarters.

Retail experts believe that the long term survival of Arcadia Group Ltd. can not be guaranteed only by closing stores and reducing rents. The scale of investment undertaken by the group is far from enough to upgrade the online and offline facilities, let alone improve the line with ASOS PLC (ASC.L), Boohoo Group PLC (BOO.L), Hennes&Mauritz AB (HMb.ST), Primark AB and so on. fashion Retailers need customer experience and product supply for effective competition. ASOS PLC's capital expenditure in the current fiscal year amounted to 200 million pounds, four times the cash commitment of Philip Green.

Chloe Collins, a senior retail analyst at GlobalData, points out that although Topshop and Topman are still loved by the millennials, Miss Selfridge, Dorothy Perkins, Wallis, Evans, and Perkins have no place in the highly saturated clothing market, and the chance of recovery is slim. In the past three years, the group has closed about 200 stores.

According to data from Jonathan de Mello, chief retail consultant of Harper Dennis Hobbs, a retail consultancy, 80% of retailers who use CVA in the past 3-4 years will eventually enter bankruptcy management procedures, including BHS Philip, which was released by Philip Green at 1 pounds in 2016.

In the face of sexual harassment scandals and lawsuits, the 67 year old Philip Green continues to stay away from the right place in Britain. As the chairman of Arcadia Group Ltd. and once known as "king of high street", he did not attend any meeting on the life and death of the group.

When accepting the Sky News interview, Philip Green said, "our team works day and night, performs well, and the supply chain and direct suppliers are also very supportive, and no one is left behind." He added: "I am glad that people continue to support our business, my family and myself."

In his exclusive interview with BBC, he stressed that Arcadia Group Ltd. was far from the point of collapse and defended the family's capital injection, saying they had "stopped a tragic car accident".

Philip Green acknowledges that the group has been too slow in the process of retail spanformation. "The market has changed radically and people need totally different services. Should we be aware of changes three or four years ago - maybe," he said.

The Arizona district attorney in May filed a lawsuit against Philip Green on the basis of four minor offences against a female Pilates instructor. Coach Katie Surridge claimed that during the 2016 and 2018 Philip Green's two visit to Tucson Canyon Ranch luxury health resort, she repeatedly made inappropriate behaviors such as holding her waist and butting her ass, which made her feel like a prostitute.

British media have revealed that Philip Green has hired Alan Jackson, the representative of the American actor Kevin Spacey Kevin Spacey, who is also facing sexual harassment charges to defend her. Philip Green "strongly denied" all allegations of sexual harassment and racial discrimination in the United States and Britain from beginning to end. British parliamentarians Peter Hain revealed that hundreds of complaints were made against Philip Green's improper behavior within Arcadia Group Ltd..

Since 2002, with the privatization of Arcadia Group Ltd. at 850 million pounds, the two couples of Philip Green have received more than 1 billion 500 million pounds through the holding company Taveta Investments Ltd.. However, in 2015, the BHS department stores, which sold the pension deficit of 571 million pounds, sold to the former racing driver Dominic Chappell without retail experience and three times breaking production, resulting in a 87 year old British traditional department store bankruptcy after a year, and finally went bankrupt. Under the pressure of many parties, the company only paid a 360 million pound to the department store's pension plan.

It is reported that the new rescue plan has explicitly banned Arcadia Group Ltd. from issuing dividends or other forms of cash to Philip Green couples.

This year's Sunday times rich list shows that the net assets of Philip Green couple who settled in tax haven in Monaco have lost 1 billion 50 million pounds in the past year, and their net worth dropped to 4 billion 900 million pounds from the peak of 2006 and 2007 to 950 million pounds.

Philip Green believes that the negative impression and distrust of British society is entirely due to media coverage. In an interview with BBC, he said the media made the public jealous of him. "They don't like people who can write checks."