Creditors voted on Wednesday to accept a package designed to rescue Sir Philip Green’s ailing Arcadia empire, in a move that could save up to 18,000 jobs.
All seven of its company voluntary arrangements, which will allow it to pay only a proportion of the amount owed to creditors, received the requisite 75% approval, the company said in a statement.
Arcadia, which owns Topshop, had warned that it was “highly likely” it would have been forced to go into administration if the deals were not approved.
In an email to Arcadia employees, CEO Ian Grabiner said the company was “extremely grateful” to its creditors for supporting the proposals.
Grabiner said the company could now “execute a turnaround plan to drive growth” in the company.
“I am confident about the future of Arcadia and our ability to provide our customers with the very best multi-channel experience, deliver the fashion trends that they demand, and ultimately inspire a renewed loyalty to our brands that will support the long-term growth of our business,” he said.
The approval of the package means that the group’s constituent brands, including Topshop, Dorothy Perkins, Miss Selfridge, and Burton, will survive.
Some 18,000 employees were facing the prospect of redundancy, as well as a significant reduction in their pension benefits.
As part of the proposals in the deal, landlords of nearly 200 Arcadia stores in the UK and Ireland will now reduce their rents by between 25% and 50%, in return for a 20% stake in the group.
Arcadia had initially asked landlords to accept cuts of up to 70%, but the Green family on Friday offered to stump up nearly £10m extra a year when it became clear that landlords would not support the original proposal.
Some 23 Arcadia stores in the UK and Ireland are also set to close as part of the deal, as are all 11 Topshop stores in the US.
As part of a separate but related plan to put two of Arcadia’s property companies into administration, a further 25 stores are likely to close.
As expected, the government’s Pension Protection Fund voted in favour of the one agreement in which it is a big creditor, after Green agreed last week to inject another another £25m ($31.7m) into the company’s pension fund.
But Arcadia’s landlords were much more divided at the meeting. The largest one, Intu (INTU.L), had signalled on Tuesday that it would not vote in favour of the rescue package.
In a statement following Wednesday’s vote, the company, which lets 35 stores to Arcadia, said that it “firmly” believed that the terms of the deal were “unfair” to its other “full rent paying” tenants, and not in the interests of its own stakeholders.
“While we are disappointed with the outcome of today’s vote, we will work constructively with Arcadia to achieve the best outcome for both sides,” it said.
With landlords increasingly resistant to the terms proposed in company voluntary agreements, the failure of the deal would have been a signal moment for the high street in the UK.
Similar company voluntary agreements have been used to stave off the collapse of other retailers, such as Debenhams and House of Fraser.