Going, going, gone. Arcadia crashes into administration bringing down the curtain on the glory days of Sir Philip Green's dominance of retailing (leaving £250m in unpaid invoices, 15,000 unemployed and the pension fund in doubt)

ICSM Credit has been warning for months that Sir Philip Green's Arcadia group were on the brink of collapse threatening not to pay an estimated £250m in invoices owed to suppliers.

"It gives me no pleasure to announce the retail giant have gone into administration," said Ian Carrotte of ICSM Credit, "but many suppliers will never see their cash having trusted that Arcadia could not fail. It's a disaster for the British High Street and a tragedy brought to the head by the Covid-19 restrictions on retailing which in my view have been heavy handed and punished bricks and mortar firms over internet outfits."

The end of an era

How could this have happened? Some experts point to a trio of factors: the decline in footfall in general in the high street; uncertainties over Brexit; and Covid-19. It's this last nail in the Arcadia coffin that has been the most damaging. 

"If the Government shuts your business down then you are no longer viable," said Ian Carrotte, "no customers mean no business - it's the first rule of business. And yet the likes of Amazon and company can go on trading as normal. It has not been a level playing field."

The Guardian reported today (November 30): "The owner of household names including Topshop, Topman, Miss Selfridge, Dorothy Perkins, Evans and Burton appointed administrators from Deloitte on Monday. No immediate redundancies were made as a result of the appointment and stores will continue to trade. The move will protect Arcadia from creditors while a buyer is sought for all or parts of the company. Green, 68, is not expected to bid for any of the assets.

"Arcadia’s brands are expected to continue trading in stores and online during the sale process, through a light-touch trading administration, the same process being used by the troubled department store chain Debenhams. Arcadia’s management will retain control of the day-to-day running of the business during the process, and its shops in England will reopen on 2 December when the coronavirus lockdown is lifted."

Buyers looking to put in bids

Ian Carrotte said he understood a number of buyers were circling the group looking to pick off the most profitable parts on the assumption that the high street returns to popularity once the pandemic ends. He said: "Boohoo, Mike Ashley’s Frasers Group, formerly known as Sports Direct, and a number of private equity players are showing interest as well as Next and Marks & Spencer may seek elements of the group."

He pointed out the firm owes millions to suppliers as well as leaving a question mark over the group's pension fund. 

"The stores will continue trading as the administrators will hope the Christmas and January sales will boost its value and attract buyers," said Ian Carrotte, "but it is more likely to be liquidated with some parts sold on as the brands and store locations still hold a premium."

About ICSM Credit

ICSM Credit has more than four decades of experience as a credit intelligence group whose members gain inside information about firms in trouble allowing them to avoid bad debts and rogue traders. To join costs less than a tank of fuel - while at the moment there's a special free temporary membership offer during the Covid-19 crisis which gives access to free legal letters. ICSM also has an effective debt collecting service which has a global reach - ask for details from Paul.

For details about ICSM Credit call 0844 854 1850 or visit the website www.icsmcredit.com or email Ian at Ian.carrotte@icsmcredit.com on how to subscribe and to join the UK’s credit intelligence network to avoid bad debts and late payers. Follow ICSM Credit on FaceBook, Twitter and YouTube and Ian Carrotte on LinkedIn.

To keep up to date subscribe to the FREE ICSM Credit Newsletter to hear all the latest insolvency news and to see who has gone out of business click on the orange panel on the top left of the home page of the website www.icsmcredit.com or send an email to Ian.carrotte@icsmcredit.com

For details for the work of the journalist Harry Mottram visit www.harrymottram.co.uk