Sir Philip Green is facing the prospect of increasing his contributions to Arcadia’s pension schemes, as he mulls a potential company voluntary arrangement.
Green appointed property advisory firm GCW to look into restructuring options, including a potential CVA, for Arcadia last week.
The Telegraph reports that, in exchange for votes from creditors in the event of a CVA, Green could be ordered to set aside more cash to help reduce the group’s current pension deficit, which was estimated at more than £1bn in 2016. The billionaire could be left footing a £50m annual bill for the next decade.
Any CVA for the Arcadia group, which owns high street brands including Topshop, Miss Selfridge and Burton, would also require the approval of the Pension Protection Fund. The pension regulator will reportedly only endorse a CVA if it is happy that a restructured Arcadia would be more likely to meet its pension contributions.
Green reportedly believes that Arcadia is paying 30% more in rents than the going rate on many of its stores and wants to slash the amount the group is paying out on its properties.
Arcadia may also seek to sell some of its investment property portfolio, valued at more than £100m.
Green has been under scrutiny from the regulator since the collapse of BHS and the government’s subsequent finding that Green had sold the business to Dominic Chappell in 2015 to avoid pension obligations.