Sir Philip Green and Kate MossTop Shop show, Front Row, Spring Summer 2018, London Fashion Week, London, UK - 17 Sep 2017

LONDON — Topshop owner Arcadia Group has narrowly avoided bankruptcy after its creditors agreed to back a corporate restructuring plan put forward by the troubled retailer in late May.

On Wednesday, following a week’s delay in voting and last-minute sweeteners from Arcadia, the group’s disgruntled creditors voted in favor of seven proposed CVAs, or company voluntary arrangements. Creditors’ approval means that Arcadia can now close stores, lay off workers, negotiate rent cuts and slash costs in a bid to return to profitability.

Had creditors, including pension trustees, suppliers and landlords, not given Arcadia the green light, the parent of brands such as Topshop, Topman, Miss Selfridge and Dorothy Perkins would have likely been forced to file for bankruptcy, putting 18,000 jobs at risk.

As reported, the group’s majority shareholder, Lady Green, wife of Arcadia’s multimillionaire owner Sir Philip Green, will invest 50 million pounds of equity into the group, in addition to the 50 million pounds of funding already provided in March.

In addition, she has agreed to fund the cost of the amended rental reduction terms within the restructuring proposals.

One big holdout in Wednesday’s vote was Intu Properties, which owns shopping centers in the U.K. and Spain.

Intu said in a statement Wednesday it believes the terms of the Arcadia CVA are unfair to its full rent-paying tenants “and not in the interests of any of our other stakeholders.” Given the vote’s outcome, the company said it would work “constructively with Arcadia to achieve the best outcome for both sides.”

In Britain, when a company is experiencing difficulties paying its debts, it can seek a CVA, which allows it to enter into a legally binding agreement with creditors, suppliers and landlords.

Separately, Arcadia has reached an agreement with the trustees of the pension schemes, the Pensions Regulator and the Pension Protection Fund.

Arcadia Group will reduce its deficit repair contributions from 50 million pounds to 25 million pounds per year, for three years, with security granted to the value of 210 million pounds over certain assets of the group, to further support the schemes.

Green will provide an additional 100 million pounds of cash to the schemes to help bridge the shortfall, plus a 25 million pound contribution to the pension groups.

Ian Grabiner, chief executive officer of Arcadia, said the group is “extremely grateful to our creditors for supporting these proposals and to Lady Green for her continued support. After many months of engaging with all our key stakeholders, taking on board their feedback, and sharing our turnaround plans, the future of Arcadia, our thousands of colleagues and our extensive supplier base is now on a much firmer footing.”

Grabiner said the priority is to reduce the cost base and create a stable financial platform. “We can execute our business turnaround plan to drive growth through our digital and wholesale channels, while ensuring our store portfolio remains at the heart of our customer offer.”

As part of the restructuring, Topshop’s 11 U.S. stores could soon be shutting their doors.

As reported, Arcadia said it has identified 23 out of its 566 U.K. and Irish trading locations for potential closure, and will ask for a reduction in rental costs and revised lease terms across 194 locations.

The stores set to close employ 520 people, and Arcadia said it would make every effort to redeploy affected colleagues within the business, where possible.

The remaining 349 locations, including the Topshop Topman flagship in Oxford Circus, will be unaffected by the proposals, Arcadia said.

In the U.S., Arcadia said it would restructure in line with its strategy to deliver its offer through its wholesale partners and digital platform. Topshop is sold through Nordstrom in the U.S.

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