Arcadia in limbo as landlords call Sir Philip Green's bluff
Other retailers have managed to get CVAs through to reduce rents but this time landlords called the tycoon's bluff. Here's why
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The adjournment of today’s crunch Arcadia creditors’ meeting to discuss the Company Voluntary Arrangement proposed by Sir Philip Green needs to be seen in that context.
Reports through the day indicated significant resistance from landlords.
In the past, the big ones have been inclined to back CVAs - a form of insolvency that allows struggling retailers to secure rent reductions and the closure of unprofitable stores.
In the current climate the reasoning has been that you either accept less or get nothing. Landlords don’t exactly have queues of replacement tenants lining up outside their doors and it’s usually the smaller owners in smaller towns with less clout that end up with nothing through the closure plans.
The tycoon had secured the support of British Land and Hammerson and (crucially) pensions watchdogs, but Intu, the big shopping centre owner, said no and so did others.
With the plans requiring 75 per cent support to go through, their chances looked more and more slim as the day went on.
What made this one so different to the other CVAs and restructurings that have gone through?
Landlords, including big ones, have been getting increasingly fed up of retailers putting the burden of their difficulties on to their shoulders.
They also reasoned that if Sir Philip secured the big rental discounts he's after then other tenants would demand the same, and perhaps threaten to follow him down the CVA route in time.
It’s fair to question the role he personally played in all this too, with his aggressive, abrasive style of doing business and the demands he’s made of landlords in the past. This could have contributed to the reluctance of some to give any quarter now he needs their help. You reap what you sow in business.
So they called his bluff and what do you know: the struggling empire, which includes Topshop, Miss Selfridge and Burton among others, hasn’t immediately gone into administration as had been threatened.
More talks will now be held. Arcadia CEO Ian Grabiner has been talking up the chances of them succeeding and the restructuring getting approved at a do over next week. It might take some sweetners, however.
Until then the future of the group remains in the balance. So do the futures of thousands of employees, powerless spectators as this high stakes games of City poker plays out.
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