Arcadia is refusing to pump more cash into its pension deficit as part of its CVA proposal, despite increasing fears pension regulators could vote against the group’s restructuring plan.

Retail Week understands that Arcadia is unwilling to budge on its proposed contributions to the pension scheme or offer landlords a larger equity stake in the business – a stance that leaves its CVA hanging in the balance with just a week to go until the crunch vote.

Sir Philip Green’s fashion stable wants to halve the annual contributions it makes to its pension scheme from £50m to £25m, with the shortfall being made up by a £100m cash injection by his wife and major shareholder, Lady Tina Green, over the next three years.

Arcadia, which owns brands including Topshop, Burton, Dorothy Perkins and Miss Selfridge, subsequently offered £185m in additional funds, made up primarily of property assets, to further reduce the pension deficit.

Last week, the Pensions Regulator hit out at Arcadia’s proposal, saying “it wasn’t sufficient to ensure that members of the scheme are adequately protected”.

Sources close to both the regulator and the Pension Protection Fund have indicated to Retail Week that Arcadia’s subsequent asset offer has not convinced it to back the CVA proposal. 

However, a source close to Arcadia said the plan would not change ahead of the vote and reiterated that pensioners would be unaffected if the CVA was voted through.

The source added that Arcadia stakeholders needed to be more “realistic in terms of where this group is, the financial performance of the group, the headwinds it’s facing and the fact it does need to reset its cost base in an effective way”.

In documents circulated to creditors ahead of the CVA launch, Arcadia revealed its total sales slumped 10.5% to £1.7bn in the year to August 2018, as like-for-like sales tumbled 7.5%.

The group is seeking to shut 23 stores and slash rents at 194 other shops under the restructuring plan, which will be voted on next Wednesday.

The PPF is one of the largest unsecured creditors in the Arcadia Group Ltd – one of seven separate operating and holding companies within the complex group to launch a CVA.

Arcadia needs 75% of creditors to give the green light to all seven CVAs in order for its restructuring plan to proceed.

As previously revealed by Retail Week, the Topshop owner has set out a three-year turnaround strategy to restore EBITDA to £117m in 2021/22, should the CVA be voted through.

The plan would focus on driving digital growth, doubling business-to-business sales such as wholesale, increasing footfall and slashing costs.