The company confirmed on Tuesday that both its U.S. landlords have agreed to withdraw their challenges and it will go on to execute all its proposed CVAs, or company voluntary arrangements.
“With these legal challenges now withdrawn all the components of the CVAs can now be implemented during this tough period for retail businesses. We can now look forward to implementing our strategy and delivering our growth plan for the Group,” said Ian Grabiner, chief executive of the Arcadia Group.
As reported in June, the group narrowly avoided bankruptcy after its creditors begrudgingly agreed to back the corporate restructuring plan put forward by the retailer in late May.
Creditors voted in favor of seven proposed CVAs, which means that Arcadia is now free to close stores, lay off workers, negotiate rent cuts and slash costs.
The property group Vornado in the U.S. initially filed applications to challenge the group’s restructuring plans, arguing that the CVA process amounted to an opaque restructuring process without court supervision, that effectively excluded the landlords’ interests. The Vornado landlords asked a New York bankruptcy court to take a closer look at how Arcadia handled proceeds from liquidating its U.S. assets, and to review its purported plan to continue with business through Nordstrom.
But Grabiner confirmed that an agreement has now been reached after “significant and constructive dialogue.”
As part of its restructuring, Arcadia 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 had commenced a process “that may result in the closure of all 11 Topshop/Topman stores in the U.S.” and will continue restructuring in line with its strategy to deliver its offer through its wholesale partners, namely Nordstrom, and digital platform.