US landlords file legal challenge against Arcadia CVA

A group of US landlords have filed a legal challenge against Philip Green’s Arcadia in light of the company voluntary agreements (CVAs) that were agreed last week, which will see its US subsidiary enter administration.

According to The Sunday Times the group of property investment companies, led by Vornado, accuse Arcadia in the papers 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”.

Under the terms, all 11 of Arcadia’s Topshop and Topman’s stores in the US will close. Big Four accountancy firm Deloitte has been appointed to handle the administration. The administration is seen as separate to the CVAs of its UK businesses, however it is part of the same restructuring plan.

Vornado, which owns both of Topshop’s New York stores, is joined by Simon Group, Caruso and The Brookfield Group. The papers opposing the administration were filed in the US on 4 June, two days before the first creditors’ vote on the CVA in the UK. The papers were also accompanied by a letter to Deloitte requesting it considered adjourning the vote.

Following the vote the landlords said that as a result their leases “will be eviscerated without any discovery and little due process”.

It is reported lawyers from Deloitte said in a letter to the presiding judge that they were “working towards a consensual resolution” of the dispute. The final hearings in the case have been postponed until 19 July.