Bishop & Sewell

Sir Philip Green, the owner of Arcadia Group had already gone through a very public emergency restructuring of his retail empire in 2019, so it has surprised very few people that the 2020 pandemic has pushed Arcadia further to the brink, writes David Little.

The wonder of it might be that it has taken almost to the end of the year for Sir Philip to announce that as many as 13,000 jobs might be at risk, with Arcadia owning brands such as Topshop, Topman, Dorothy Perkins, Wallis, Miss Selfridge, Evans, Burton and Outfit.

It was also no surprise that Mike Ashley, the owner of Frasers Group, might be amongst the bidders if Arcadia goes into administration. Frasers Group confirmed, in this story by Sky News, that it is awaiting a response from Sir Philip to an offer of a £50m ‘emergency’ loan.

However, as Sky News suggested via Oliver Shah, the Business editor of the Sunday Times, who has written a book about Sir Philip Green, the Frasers Group offer is probably a piece of ‘mischief’, and he expected the tycoon to ‘slide away’ from the UK in the event that Arcadia collapsed.

Arcadia acknowledged on Friday that it was working on a number of ‘contingency options’ to secure the future of the group’s brands.

Mr Ashley told ITV News last week, that he was interested in all of Sir Philip’s brands in the event of Arcadia’s collapse – a situation that would cap a dramatic downfall for the Topshop tycoon.

Given the fierce rivalry between Mr Ashley and Sir Philip over the years, and a reported £300m+ deficit in Arcadia’s pension fund, there are many hurdles for Sir Philip to overcome, beyond that of his pride.

“Should the company and the Arcadia Group’s efforts to agree an emergency funding package fail, and the Arcadia Group enter into administration, the company would be interested in participating in any sale process,” Sky News reported Frasers Group as saying.

Mr Ashley is already contemplating a bid for a number of Debenhams stores, whose potential rescue must now be hanging by a thread as he contemplates which stores from both chains would best suit his own retail empire.

All this leaves me to consider: are the usual considerations regarding the acquisition of an insolvent business in play here? In my experience, investors typically approach valuing a business from the perspective of what return they can achieve, which can be very different from the historical return.

Also, even though the buyer may have more capital to invest and may believe they have a better management team, the high levels of uncertainty regarding the future of the economy require careful planning, exhaustive due diligence and thoughtful drafting.

Another consideration is having to deal with customers and suppliers. Will the acquiring company impress suppliers, who may have been left without payment for several months? Should the owner of JD Sports acquire Topshop, and would this matter? Or are the brands sufficiently distant for it not to be a factor?

All this is a challenge for performing thorough due diligence when the speed of the transactions can sometimes occur at lightning pace.

One thing is for sure, whilst the entertainment of seeing two titans of UK retail battle for the honour of being Britain’s biggest clothes seller might be of limited interest outside the business pages, the gaps that will be left on the High Street, once redundant branches are closed, will be very noticeable to us all throughout the UK.

Whatever the legal issue, we have a proven track record of supporting businesses through thick & thin.

If you would like to discuss any of these matters further, please email me at, or call me, on +44 (0)20 7079 4143.

David Little is a Partner in our Corporate & Commercial team. Should you require any further advice or assistance, please contact us at

The above is accurate as at 01 December 2020. The information above may be subject to change during these ever-changing times.

The content of this note should not be considered legal advice and each matter should be considered on a case by case basis.

Category: News | Date: 1st Dec 2020

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