LONDON (Reuters) - The Arcadia fashion group of British tycoon Philip Green has fallen into administration, placing over 13,000 jobs at risk and becoming the biggest corporate casualty of the COVID-19 pandemic so far in the world.
Deloitte said it was named Arcadia's administrator late on Monday and would locate purchasers for the brands of the group: Topshop, Topman, Dorothy Perkins, Wallis, Miss Selfridge, Evans, Burton and Outfit.
In the United Kingdom and 22 abroad, the company trades from 444 leased locations.
Deloitte said the stores of Arcadia would continue to trade, its online services would remain active and concession partners' supplies would continue.
It said no redundancies had been confirmed immediately.
"We will seek expressions of interest quickly and expect to identify one or more buyers to ensure the company's future success," said Matt Smith, joint administrator of Deloitte.
Green, who was pictured in Monaco over the weekend where his 100 million pound Lionheart super yacht is docked, bought Arcadia in 2002 for 850 million pounds.
He had no immediate response, but his CEO firmly placed the blame on the pandemic for Arcadia's demise.
"The obstacles we encountered were far too severe in the face of the most difficult trading conditions we've ever experienced," Ian Grabiner said.
Alok Sharma, the British Business Minister, said the administration was "incredibly sad news" and would help those affected by the UK government.
It has struggled in recent years, underinvesting and struggling to keep pace with rivals in an increasingly online retail market, while COVID-19 lockdowns forced Arcadia over the edge.
Its brands were squeezed between the likes of Zara, H&M, and Primark from Inditex, and ASOS and Boohoo online-only players.
Last year, creditors accepted a restructuring deal, slashing rents and closing shops, but it proved to be just a brief respite.
On Monday, Mike Ashley's Frasers Group said it was interested in engaging in any sales process for Arcadia.
Analysts regard Topshop, once the go-to destination for teenagers and fashion lovers, as Arcadia's most desirable asset.
Marks & Spencer, Next and Boohoo, as well as private equity players, have also been listed by media reports as possible bidders for individual brands. The three firms both refused to comment.
The fall of Arcadia may have a knock-on effect on the future of the Debenhams department store chain, which is currently under management and employs 12,000 employees.
Arcadia is one of Debenhams' main holders of concessions.
Shares in JD Sports Fashion, related to the purchase of Debenhams, closed up 5.9 percent, suggesting a lack of interest. Frasers shares ended down 5.7 percent .
DEFICITIT ON PENSION FUNDThe staff of Arcadia also faces confusion about a shortfall in the pension fund of the group, estimated at around 350 million pounds by analysts.
As part of last year's restructuring, Arcadia agreed to provide the pension schemes with 210 million pounds of property asset protection, while Tina Green, Philip's wife and Arcadia's ultimate owner, agreed to contribute 100 million pounds over three years to the schemes.
Philip Green should do the right thing," said opposition Labour Party leader Keir Starmer, "and fill the Arcadia pension gap.
If he does not pay up, the 10,000 pension scheme members of Arcadia can still earn the bulk of their entitlement through the Pension Insurance Fund, the government's lifeboat scheme.
Sharma said the administrators had three months to file a report with The Insolvency Service on the actions of Arcadia's directors that will decide whether a full investigation is needed.
"I am going to keep a very close eye on this process," he said.
Bricks-and-mortar clothing retailers in Britain were facing a major structural challenge well before the pandemic, with the economics of conventional leasing operating stores becoming increasingly challenging as more trade migrates online.
Oasis, Factory, Laura Ashley, Peacocks and Jaeger have all fallen into administration this year.
For a timeline of Philip Green/Arcadia, click:
