Arcadia in US bankruptcy filing, Topshop liquidation starts soon despite sale hopes - report
Arcadia Group has filed for bankruptcy in the US under chapter 15 of the bankruptcy code (the section of the code that deals with foreign insolvencies) and could start liquidation sales for its American Topshop/Topman stores as early as this weekend.
It emerged this week that the UK parent company is planning to exit all 11 of its American locations as part of a wide-ranging plan to return it to full health in its core UK market.
A chapter 15 filing, like the much better known Chapter 11, can prevent creditors from seizing assets and launching lawsuits, which the company said would help to reduce losses overall and creates fairness for all creditors.
The filing was made in New York and has provisional approval, with a final hearing date set for June 14, the Wall Street Journal reported.
Arcadia wants to sell its US operation as a going concern, either in its entirety just part of it, but is reportedly already working with Hilco Merchant Resources on US inventory liquidation.
Its 11 stores include sites in New York, Chicago, Las Vegas, Atlanta, Houston and LA, with around 800 people being employed by the company in its shops and offices.
The US move comes as the company also plans to close 23 shops in Britain, although its plan has already run into major opposition with the UK's Pensions Regulator unsupportive of its plan to cut payments into its pension fund.
Arcadia has blamed its problems on increases in the UK's national living wage and rising import costs due to the falling pound, a direct result of the Brexit debacle that has hurt large parts of British industry in the last three years.
It also said that customers moving online has been having an effect and it plans to boost its digital operations as a result. Competitor markdowns as retailers battle to attract shoppers and a high level of returns have also weighed on the business.
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