Green’s Arcadia rescue plan faces US challenge in British courts
SIR PHILIP GREEN’S retail empire was dealt another blow yesterday after a powerful US landlord launched a legal challenge against its rescue plan.
Property giant Vornado intends to contest Arcadia’s restructuring plan in British courts in an attempt to recoup some of its losses.
In June a group of five landlords including Vornado filed papers in a US bankruptcy court challenging Arcadia’s intention to wind down its US operations, but lost the legal battle this month. Ian Grabiner, chief executive of Arcadia, indicated the company would fight the legal move. He said: “These challenges are entirely without merit and we will vigorously defend them.”
Sir Philip managed to stave off the collapse of his Arcadia retail empire last month after winning the backing of its landlords and other creditors for a company voluntary arrangement, a controversial form of insolvency, albeit at the second attempt.
About 50 stores will close, putting 1,000 jobs at risk, and a further 194 will have their rents slashed.
The tycoon’s American ambitions came to a halt in May when Arcadia, which owns chains including Topshop, Dorothy Perkins and Miss Selfridge, said it will close all 11 of its US stores. It still sells through Topshop’s website and concessions in Nordstrom department stores.
Vornado has previously demanded the court holds Arcadia’s gains in the US from the liquidation, if any, to prevent the cash from making its way back to the UK.
It is challenging two of the group’s seven CVAS. A date for the hearing has yet to be set.
Sir Philip is said to have fallen out with Vornado’s chief executive Steven Roth, who owns Topshop’s store on Fifth Avenue, The Sunday Times has reported. Private equity backer Leonard Green, based in Los Angeles, ploughed £350m into Topshop only to sell back its 25pc stake for $1 in April.
Mr Grabiner continued: “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.”
Profits at Arcadia, which has been reeling from the shift to online shopping, have fallen by 83pc in three years to £30m.