Miss Selfridge, Wallis, Topshop amongst others were approved by Arcadia’s creditors.
A week and five hours discussion ended up with the Arcadia’s landlord’s agreement to cut rent, close 23 stores and laying off 520.
Additionally, another 25 stores will come down with 500 jobs once the plan is in place.
CEO of Arcadia Group, Ian Grabiner, said he was confident concerning the future of Arcadia.
He said henceforth having the right structure to reduce the cost base and creating a stable financial platform they can execute the business turnaround to drive growth.
The Arcadia’s landlords voted regarding the rescue plan for the company, which is known as (CVA) Company Voluntary Arrangement. This is known as an insolvency process which allows a business to discuss with its creditors and reach an agreement to either pay off all or part of the debt.
In the case of Arcadia, it resulted in store closures and rent reduction across its 194 out of 566 Irish and UK stores for three years.
Pension trustees, most suppliers, and Pension Protection Fund securely backed Arcadia last week for its plan.
However one of its biggest creditors, the Shopping Centre Operator Intu was against the deal calling it unfair and even voted against it.
Intu is said to own and manage prominent retail properties in the UK.
A spokesperson from Intu said they firmly believe the terms of Arcadia CVA were unfair to the tenants paying full rent and not to the interest of other stakeholders thaareis including Intu and 130,000 people whose jobs relied on prime shopping centers success.
Sir Philip Green’s wife, Lady Tina Green and Arcadia’s majority shareholders have committed themselves to pay 25 million Euros annually to the pension funds for over three years and an additional 25 million Euros.
Chair of the Work Committee, Rt Hon Frank Field MP said that now thankfully the life of Arcadia had been extended the Committee would ensure that the Pension Regulatory prepares an effective program to ensure that all Arcadia staff do receive the full pension that Lady Green and Sir Philip had promised them.
The Vote was so crucial because,
The Arcadia would have no choice but to go into administration if the CVA would not have been passed.
Compared to 219 million Euros two years ago profits this year they are expected at 30 million Euros.
Arcadia was faced with fixed charges of 100 million Euros a year and struggling to pay its way resulting in CVA.
A CVA is an agreement with company creditors as part of the insolvency procedure.
Arcadia had previously argued it was over-rented. Therefore, CVA called for cuts of 30% to 70%. However, after much resistance from landlords, it agreed to rent reductions of between 25% and 50%.
So What Went Wrong with Arcadia?
The retail analyst is saying Arcadia’s misfortune is due to loss on rentals than the competition.
Losing to contemporary fast-fashion retailers coming from Street chains like H&M and Zara and online retailers like Asos.
Senior Retailer analyst Chloe Collins at GlobalData said most of its brands had lost relevance in today’s retail trends.