The future of Sir Philip Green's empire hangs in the balance as industry insiders say a planned rescue may struggle to win approval from landlords.
Chairman of the Greens Arcadia Group, which owns a number of high-end chains, including Topshop, Topman, Miss Selfridge, Dorothy Perkins and Wallis, were locked in an all-day meeting on Tuesday, trying to agree on a way for the group.
Arcadia's advisors in Deloitte are understood to push ahead with plans for the insolvency process involving breakdowns and the closure of about 50 of the Group's 570 plus stores. Details can be announced within days.
But industry sources say that Arcadia can fight to secure enough support for the restructuring, known as a corporate volunteer event (CVA), which requires approval from 75% of landlords. Arcadia is likely to receive approval for changes before the next quarterly lease day at the end of June.
Green has allegedly offered to give landlords a stake in the business and to invest around £ 1[ads1]00 million in regaining the remaining store if they are back an agreement.
One source said, "With a business supported by a high net worth, some people think:" Why should I take a haircut? "It's a tougher sale with a high profile."
Another source said Green faced a setback from property owners who had already been forced to swallow the lute and store closures after the CVA with a number of high quality chains, including New Look, Carpetright and Mothercare. "Landlords are sick of CVAs … Especially with Green, they will not look friendly to him and say," I can't afford the rent "when sailing around in a £ 100m boat."
Another source of expertise agreed on Arcadia was unlikely to secure the support of enough landlords. He suggested that the group could nevertheless risk putting forward a CVA as the probable alternative was administration.
Arcadia has bought back a 25% stake in its Topshop chain from the US private equity firm Leonard Green and aims to halve annual payments to its pension fund from £ 50m to £ 25m in a rescue plan designed for cutting costs and updating to cope with online competition.
Greens retail empire has hit falling sales as it fights online competition from Asos and Boohoo while buyers have switched
Restructuring experts Jamie Drummond Smith and Peter Bloxham recently joined Topshop, Arcadia Group and Green's holding company Taveta Investments for to help prepare a rescue plan.
But Green faces an uphill in his attempt to put Arcadia in a firmer way.
Regulators are considering attempting to cut retirement payments just two years after Green agreed to ncrease annual payments from £ 25m to £ 50m to cope with a pension deficit of 727mb last year.
Landlords, regulators and pension fund managers have also been skeptical about taking a hairstyle as Arcadia's parent company, Taveta, paid NOK 257 million in 2017 to Green's wife, Tina Green, the Group's owner who is based in the tax haven in Monaco, in relation to loan notes. linked to the collapsed department store chain BHS.
In 2005, the Green Family also beat a £ 1.2 billion dividend from Arcadia, the largest payout in corporate history at that time.
Green's reputation was cut by BHS's high-profile breakdown, leading to the loss of 11,000 jobs. He adds more than NOK 300 million into the department store's pension fund following extensive public pressure, including a threat to withdraw.
More recently, Green has been criticized by accusations of inappropriate behavior of former employees, whom he refuses.