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Arcadia Group CVAs challenged

Arcadia Group has received applications from US property group, Vornado, to challenge two of its company voluntary arrangements (CVAs). 

The group received backing on 12 June from the majority of its creditors for seven CVAs, as part of a restructuring.

It has since received applications from 480-486 Broadway LLC and TMO 1 LLC, both legal entities of Vornado, to challenge the Arcadia Group and Topshop Topman CVAs.

Last month five landlords, led by Vornado, filed a legal challenge against Topshop’s liquidation in America, in a bid to recoup some of their losses, which they claim to be in excess of £100m. They claimed Arcadia Group “manipulated and gerrymandered” its company voluntary arrangement (CVA) in the UK to affect the “complete forfeiture and deprivation” of their rights. 

However, Sir Philip Green won the legal challenge earlier this month and is now able to move cash generated from liquidating stock in Topshop’s 11 US stores back to the UK. The funds will reportedly be used to repay some of the debts owed to creditors affected by Arcadia’s CVA.

Ian Grabiner, CEO of Arcadia Group, said: “These challenges are entirely without merit and we will vigorously defend them. The CVAs are a vital part of our restructuring, putting the business on a firm financial footing and enabling significant investment as part of our growth plans which will ultimately benefit all our stakeholders. Our group continues to trade as normal and we remain focussed on delivering our turnaround plans.”

Under the terms of the CVA deals approved by creditors, Arcadia will close all 11 Topshop and Topman stores in the US. The first US Topshop opened in Manhattan in 2009. 

The group will also close 23 of its UK and Irish stores. Alongside the CVA, Arcadia plans to put two subsidiaries into administration, resulting in a further 25 UK store closures. Six Miss Selfridge stores and 19 Evans stores will also be affected in the UK.

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