US landlords challenge Arcadia over Topshop closures
Arcadia is reportedly facing a legal challenge in the US following the bankruptcy filing for its Topshop/Topman chain in the country. The company is completely shutting down the loss-making Topshop operation in North America but a group of American property owners have launched the action, claiming they've lost more than £100 million.
Several newspapers reported them lodging an objection to the bankruptcy filing and the group, which is led by Vornado, is accusing Arcadia of “engaging in a convoluted scheme to deprive the…US landlords of their bargained-for contractual rights by manipulating and exploiting a private, little-used out-of-court process in the UK known as a company voluntary arrangement," the FT said.
Vornado’s involvement is crucial as it owns the Fifth Avenue, New York City, store that reportedly accounts for nearly half of the chain’s £27.6m rent bill in America. Major landlord Simon Property Group is also involved in the action.
The US landlord group has asked the court to hold the retailer’s American assets, and any money made from its closing-down sale, in an escrow account and stop the cash being transferred to the UK. Apparently, they filed their objection before the first Arcadia CVA vote was due to take place in the UK and claim that as a result of the CVA approval, their leases “will be eviscerated without any discovery and little due process”.
The UK CVA plan finally received creditor approval last week after having been delayed as the company worked to strike deals with some unhappy landlords. But Arcadia’s advisor Deloitte has called for the US landlords’ case to be rejected saying the UK CVA is irrelevant to the US business.
Topshop was launched in the US a decade ago but had expanded to only 11 branches since its 2009 debut. The brand will still have a presence in the country though, as it will be available through its website and concessions in department store group Nordstrom.
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