The UK government has promised to keep “a close eye” on the insolvency process at high street fashion retailer Arcadia as controversy over its collapse mounts.
Asked about the collapse of the chain, which puts more than 13,000 jobs at risk, Cabinet Office minister Michael Gove said it was “clear that there had been some missteps along the way” in the management of the company.
He declined to comment on whether the owner of the group, Philip Green, should make good the deficit in the group’s pension fund.
Arcadia stores, which include brands such as Topshop, Burton and Outfit, will remain open for the present.
In a tweet on Monday after the administration was announced, business secretary Alok Sharma said: “Within three months, the administrators have a duty to file a report on director conduct with the Insolvency Service, who will then determine whether a full investigation is required.”
The group’s pension fund will now pass into an “assessment period” at the Pension Protection Fund, which could result in a cut in benefits for future Arcadia pensioners.
Arcadia Pension Schemes said: “This is obviously very disappointing news for members of the schemes.”
The schemes’ trustees will work with the administrators and the PPF and keep members updated, a spokesperson said, adding: “Members can be assured that, in the meantime, all pension payments will continue to be paid on their normal, due dates.”
The Pensions Regulator is under separate scrutiny from MPs over its decision to allow Arcadia to halve its payments to the company pension fund in 2019 as part of a rescue deal to keep the company afloat.
On Monday, the Work and Pensions select committee wrote to the chief executive of The Pensions Regulator asking a number of questions about the funding package it approved for Arcadia last year.
Under the deal, Arcadia halved its annual pension contributions from £50m to £25m. In return Tina Green, Sir Philip’s wife, guaranteed to put £100m into the schemes through a series of staggered payments.
In July 2019, Charles Counsell, chief executive of The Pensions Regulator, wrote to the Work and Pensions select committee stating that “the £100m is guaranteed to be paid regardless of what happens to [Arcadia] in the future”.
In the Work and Pensions select committee letter, chairman Stephen Timms asked the regulator when it might expect Lady Green to fully pay up on the guarantee, and when the assets pledged to the scheme might be transferred to the funds, now being passed to the industry-funded PPF.
The Pensions Regulator said: “We are aware of the challenges that the business is currently facing in these unprecedented times and we continue to work with the directors, the trustees and their respective advisers, as well as the PPF, to protect the position of the Arcadia pension schemes’ members to the fullest extent possible.”
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