The High Court has appointed joint provisional liquidators to four Irish operating companies that are part of the UK high street fashion group Arcadia.
The companies, including Topshop/Topman Ireland, between them employ 487 people in 14 stores in the Republic, and also have concession stands in various premises.
It is hoped to procure the sale of the Irish operations as part of an overall sale of the Arcadia group, and the intent is that the Irish stores will continue to trade under the provisional liquidators through Christmas to maximise the value of winter fashion stock, the court was told.
The application for the appointment came on Monday night on the heels of the appointment of provisional administrators to the Arcadia Group (AGL) in the UK.
AGL owns the Topshop, Topman, Dorothy Perkins, Wallis Retail Ireland Ltd, Miss Selfridge, Evans, Burton and Outfit brands, trading from more than 500 stores in the UK employing more than 13,000 staff.
The court was told by John Lavelle, instructed by Arthur Cox solicitors, that the Irish companies rely entirely on AGL for them to trade, and cannot operate independently of the Arcadia group as a whole.
UK entities own the relevant brands and intellectual property rights, operate the online platforms and own the leasehold interests in the premises used by the Irish companies, the court heard.
At a late-night sitting Mr Justice Michael Quinn granted the application to appoint Ken Fennell and James Anderson of Deloitte as joint provisional liquidators.
The companies are Arcadia Group Multiples Ireland Ltd, Topshop/Topman Ireland Ltd, Wallis Retail Ireland and Miss Selfridge Retail Ireland.
Difficulties
The judge was told the companies were unable to pay their debts for reasons including the insolvency of the Arcadia group as a whole.
The companies had encountered difficulties prior to this year for reasons including the shift to online sales and increased competition, and those difficulties were compounded by the Covid-19 pandemic.
The impact on the Irish operations of Arcadia was “particularly severe”, with the Irish stores, which were closed for 23 weeks, seeing revenues plummet by up to 60 per cent, counsel said.
Because online sales were carried out through UK entities the Irish companies did not generate any income from those sales, and all four companies made losses in the financial year to end August 2020.
Counsel said the main assets of the companies were sums due from other undertakings in the Arcadia group, but because there was an insolvency process under way the likelihood of realising those inter-group debts was limited.
The companies also disputed the extent of a demand received from pension scheme trustees, the court was told.
Mr Justice Quinn said he was satisfied to appoint the joint provisional liquidators and returned the petition to December 21st.
It was said the provisional liquidators’ appointment would facilitate the disposal of the Irish assets and potentially preserve employment, the judge noted.
He said a “particular feature” of this application was the hope a transaction in the UK would preserve the business and the jobs, but if that does not occur the operation of the stores during the winter months would be a better option for employees and creditors.
The appointment would facilitate the stores here reopening on Tuesday, he added.
No redundancies
Philip Green’s Arcadia group owns the Topshop, Topman, Dorothy Perkins, Wallis, Miss Selfridge, Evans, Burton and Outfit brands, trading from 444 leased sites in the UK and 22 overseas.
In the UK Deloitte said the stores would remain open or reopen when permitted under the government’s Covid-19 restrictions, and no redundancies were being immediately announced.
“We will now work with the existing management team and broader stakeholders to assess all options available for the future of the group’s businesses,” said Matt Smith, joint administrator at Deloitte.
He said Deloitte would rapidly seek expressions of interest, and expected to identify one or more buyers to ensure the future of the businesses.
“This is an incredibly sad day for all of our colleagues as well as our suppliers and our many other stakeholders,” said Arcadia chief executive Ian Grabiner.
He blamed the pandemic for the group’s demise. “In the face of the most difficult trading conditions we have ever experienced, the obstacles we encountered were far too severe.”
Arcadia has turned down rival Frasers Group's offer of a "lifeline" loan of up to £50 million, sportswear retailer Frasers, controlled by Mike Ashley, said on Monday.
"Frasers Group were not given any reasons for the rejection [of the loan] nor did Frasers Group have any engagement from Arcadia before the loan was declined," Frasers said.
Arcadia had declined to comment.
Earlier on Monday, Frasers said that,should Arcadia Group enter into administration it would be interested in participating in any sale process. – additional copy: Reuters
