Arcadia pensions deficit could pose problems for CVA

As pressure continues to mount at Arcadia following reports last week that Sir Philip Green was considering deploying a company voluntary arrangement (CVA), the UK retail group could also face pressure to increase annual payments to its pension scheme, The Telegraph reports.

For Arcadia to successfully deploy a CVA it would require approval from creditors such as landlords and the Pension Protection Fund (PPF), meaning the group may have to contribute more to its pension fund in order to secure support.

In April 2017, Arcadia agreed to double the pension scheme deficit recovery contributions to 50 million pounds per year for 10 years, after it was estimated in 2016 to be around one billion pounds.

Pension deficit black hole could pose problems for Arcadia CVA

Earlier in March, Work and Pensions Committee chair, Frank Field, wrote to the group’s pensions manager, Margaret Hannell, requesting an update on its two schemes. The letter said: "Might you please let us know to what extent the increased deficit recovery contributions have materially improved the deficit in both schemes?”

Last week, the BBC reported that Arcadia group appointed property advisers from consultancy firm GCW to work alongside Deloitte on the company’s restructuring strategy. A potential CVA employed by the group would allow Arcadia Group, which owns Topshop, Dorothy Perkins, Evans, Wallis, Burton and Miss Selfridge, to close down stores, make redundancies and propose rent cuts.

Earlier in March, however, Arcadia said it wasn’t planning to close a “significant” number of stores. A spokesperson for Arcadia said: “Within an exceptionally challenging retail market and given the continued pressures that are specific to the UK high street we are exploring several options to enable the business to operate in a more efficient manner.

“None of the options being explored involve a significant number of redundancies or store closures.”

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