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The Guardian - UK
The Guardian - UK
Business
Graeme Wearden

Philip Green cheers 'last-minute winner' as landlords back Arcadia rescue - business live

People walk past a Topshop and Topman store, owned by Arcadia Group, in central London.
People walk past a Topshop and Topman store, owned by Arcadia Group, in central London. Photograph: Henry Nicholls/Reuters

Full story: How Arcadia avoided administration disaster

If you’re just tuning in, here’s our news story on today’s dramatic vote on Arcadia’s future:

Philip Green’s Arcadia avoids administration as rescue deal backed

Sir Philip Green’s Topshop to Burton retail empire has staved off collapse after winning the backing of creditors for a rescue plan that involves the closure of 50 stores and 1,000 job losses.

Landlords of Arcadia Group’s 570 UK standalone stores, which are also home to Dorothy Perkins, Topman, Wallis, Evans, Outfit and Miss Selfridge, approved the plan on Wednesday, averting a slump into administration that would have put a further 17,000 jobs at risk.

Ian Grabiner, chief executive of Arcadia Group, said:

“After many months of engaging with all our key stakeholders, taking on board their feedback, and sharing our turnaround plans, the future of Arcadia, our thousands of colleagues, and our extensive supplier base is now on a much firmer footing.

“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.

The complex deal required 75% of all creditors and at least half of landlords to vote in favour of seven company voluntary arrangements (CVAs), which are insolvency procedures that have been used by a string of high street names to shut stores, including New Look and Mothercare.

Green sought to win over landlords with an initial promise to give them a 20% stake in the business and invest an extra £50m in the stores as part of a £135m turnaround plan intended to help Arcadia compete with rivals such as Asos, Zara and H&M.

More here:

Green: We've scored a 95th-minute winner

Sky News’s Adam Parsons has caught up with Sir Philip Green.

The retail chief has welcomed today’s support from creditors, and even claimed Arcadia has scored a “95th-minute” winner in its battle for survival.

Simply getting its CVA approved today doesn’t guarantee Arcadia’s long-term survival.

Nelson Blackley of Nottingham Business School, said points out that other retailers have tried restructuring themselves, but still failed.

Given the crisis on the high street, Sir Philip Green needs to innovate, and possibly shut more stores too.

“What today’s decision hasn’t changed is the level of competition in the fashion retail sector, where online disruptors, such as ASOS and Bohoo.com as well as fast fashion retailers with physical stores such as Zara, H&M and Primark, all of whom have all taken share from Arcadia.

As recent history has demonstrated, a CVA is certainly not a guarantee of retail survival. British Home Stores, Austin Reed and Toys R Us, amongst others, all went down the CVA route but eventually failed. “

My colleague Sarah Butler’s also heard that Land Securities, one of the UK’s biggest commercial property firms, backed Arcadia’s CVA.

We mentioned this morning that Landsec, with its 12 Arcadia stores, could play a crucial role today, along with other waverers such as the Crown Estate who also backed the plan eventually.

The FT’s Jonathan Eley says Arcadia’s landlords have resented paying the bill for the company’s poor performance.

He writes:

Many property companies bitterly resented the terms of the CVA [Company Voluntary Arrangement], saying that it was opportunistic and forced creditors to foot the bill for years of under-investment in the core operations.

Arcadia has said it will invest £135m over three years in refurbishing stores, improving its website and building more distribution capability. But this represents a lower rate of capital spending than seen in previous years and is being financed by improved profit and cash flow, not new investment into the business.

Landlords who voted in favour of the plan will share around £40m from a compensation fund, and if Arcadia is sold in the future they will also take 20 per cent of any equity value ascribed to it.

17,000 jobs saved, but 1,000 face axe

We have confirmation that around 1,000 jobs will be lost at Arcadia, through the store closures outlined in the restructuring deal.

Stephanie White, Associate and real estate expert at Stevens & Bolton LLP, points out that Arcadia could face a legal challenge from unhappy creditors.

Here’s her take on today’s agreement:

“Landlords struck a compromise to avoid the group passing into the hands of the Administrators, which could be catastrophic for the high street.

“Landlords pushed the Arcadia group to come up with a better deal and they were right to do that because Arcadia has come up with a proposal that landlords felt able to give their backing.

“However, Arcadia would be wise to keep the champagne on ice until the period to mount a legal challenge has passed. The deal did not have unanimous support and there is still a risk that the landlords who did not back the deal could find grounds to challenge it.”

Frank Field demand pension promises

Frank Field, a long-time critic of Philip Green, is calling on the retail chief to give “binding promises” that Arcadia’s pensions will be fully guaranteed.

Parliament’s Work and Pensions Committee (which Field chairs) has written to the Pensions Regulator seeking “further clarity and assurances” over the cash and assets that will be available to plug Arcadia’s massive pension scheme deficit.

Field explains:

“Now that, thankfully, Arcadia’s life has been extended, the Committee will try to ensure that the Pensions Regulator gets an effective programme in place to ensure that Arcadia staff receive in full the pensions that Sir Philip and Lady Green have promised them.

Last week the Greens agreed to put £25m more into the pensions pot, having been asked to cough up £50m to fix its black hole.

Intu, one of Arcadia’s biggest landlords, has heavily criticised today’s decision after being outvoted by other creditors.

Intu says the CVA gives Arcadia an unfair advantage against other retailers, through a lower rent bill.

Rating agency Moody’s say today’s rescue deal undermines the financial health of UK property firms.

Ramzi Kattan, a vice president at Moody’s explains:

“Arcadia’s landlords have approved company voluntary arrangements that will close stores and slash rents.

This is credit negative for retail property owners, who face continued weak operating performance, with declining footfall and retail sales, and downward pressure on rents.”

That explains why landlords rejected the original CVA a week ago, forcing Philip Green to sweeten the deal (with smaller rent cuts).

Updated

Ultimately, landlords couldn’t face the prospect of shutting hundreds of Arcadia stores across the UK, says Joanne Fearnley, partner and a commercial property expert at law firm Gordons.

“Ultimately, the risk to the further demise of the High Street and the loss of big names - Topshop, Burton, Miss Selfridge and Dorothy Perkins - was too much of a bitter pill for landlords to swallow and they have settled for large rent reductions instead.

This means 23 stores will close and the rest of Arcadia’s 500 plus stores will keep trading. The threat of administration has been lifted and jobs saved…for now.

But....she also warns that Arcadia’s long-term future is still unclear:

“As we are seeing with other retailers who have followed the same route, time will tell whether or not this is a temporary saving or whether the dent to the confidence of landlords will result in them putting in place contingency plans on the prime locations in particular, so that the demise of Arcadia becomes inevitable over time.”

Updated

Reaction is flooding in:

Here’s the BBC’s Danni Hewson:

And here’s James Child of Estates Gazette:

What happens now?

By approving Arcadia’a CVA, its landlords have saved the company from collapsing into administration.

That means that your local Top Shop, Miss Selfridge, Dorothy Perkins and Burton store will be open as usual tomorrow. Arcadia’s 18,000 staff will still have a job too.

But... as part of the deal, some 23 stores will shut, costing hundreds of jobs. Another 25 or so are earmarked to close in future too.

Sky News’s Mark Kleinman points out that Arcadia faces further hurdles:

This rescue deal will put Arcadia on a firmer financial footing, says its clearly relieved CEO, Ian Grabiner.

He says:

“We are extremely grateful to our creditors for supporting these proposals and to Lady Green for her continued support. After many months of engaging with all our key stakeholders, taking on board their feedback, and sharing our turnaround plans, the future of Arcadia, our thousands of colleagues, and our extensive supplier base is now on a much firmer footing.

“From today, with the right structure in place to reduce our cost base and create a stable financial platform for the Group, we can execute our business turnaround plan to drive growth through our digital and wholesale channels, while ensuring our store portfolio remains at the heart of our customer offer.

“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.

“Finally, I would like to thank all of our team and advisors for their support throughout the CVA process. It has been incredibly challenging for all concerned but I believe this is the right outcome for all our creditors.”

ARCADIA: Rescue deal has been approved

It’s Official: Arcadia’s creditors have, as we thought, approved the company’s rescue plan.

Here’s the company’s statement, which explains how the Green family are putting millions of pounds of their own money into the deal (to persuade landlords to swallow hefty rent reductions).

Arcadia Group creditors approve CVA proposals

Arcadia Group is pleased to announce that all seven of its Company Voluntary Arrangements (CVAs) have today been approved by the required majority of the companies’ creditors, including its pension trustees, suppliers and landlords.

As described in the CVA proposals, upon there being no remaining risk of challenge to the CVAs, the Group’s majority shareholder, Lady Green, will invest £50m of equity into the Group, in addition to the £50m of funding already provided in March. Lady Green has also agreed to fund the cost of the amended rental reduction terms within the CVA proposals, as announced on 7 June.

Separately, the Group has reached an agreement with the Trustees of the pension schemes, the Pensions Regulator and the Pension Protection Fund, by which Arcadia Group will reduce its deficit repair contributions from £50m to £25m per year, for three years, with security granted to the value of £210m over certain assets of the Group, to further support the schemes.

As previously announced, Lady Green will provide an additional £100m of cash into the schemes to help bridge the shortfall, with funding of £25m per year for the next three years plus an additional £25m contribution.

Property Week’s David Parsley has also heard that Sir Philip Green may have succeeded in persuading creditors to back his rescue plan.

My colleague Sarah Butler has heard that all seven of Arcadia’s CVAs have passed.

That’s unconfirmed at this stage -- but if it’s correct, it means that the threat of administration has been lifted.

It would mean that 23 stores would close, but the rest of Arcadia’s 500+ estate of shops would keep trading.

More to follow!

The flagship Topshop store, operated by Arcadia, on Oxford Street in London today
The flagship Topshop store, operated by Arcadia, on Oxford Street in London today Photograph: Isabel Infantes/AFP/Getty Images

The delay is causing some jitters among Arcadia’s landlords.....

Oh dear! We’ve now hearing that the results of the creditors’ vote may not come for another hour or so.

That’s two hours later than expected.

What does it mean?

It could be a sign that at least one of the seven CVA agreements has been rejected (confusingly, there is one vote for each of Arcadia’s seven brands).

Or it could mean that Sir Philip Green is engaged in some last-minute arm twisting.

This is turning into a repeat of last Wednesday’s meeting, when the CVA process was dramatically delayed once it became clear the vote was going against Arcadia.

Journalists, alas, weren’t allowed into today’s Arcadia meeting, but here’s some photos from outside:

The bells of St Paul’s have rung out to mark 4pm.

But there’s no word from Arcadia’s creditors meeting, just around the corner from the Cathedral at Etc Venues on Aldersgate. Surely the result of the votes will come soon....

Analyst: Brexit partly to blame

Brexit has helped to drag Arcadia to the brink of administration, says senior market analyst Fiona Cincotta of City Index.

She points out that a clutch of retailers have hit serious problems since the 2016 referendum:

Brexit is slowly but incredibly persistently eroding the confidence and the spending power of the British consumer. The process started fairly discreetly but given that it has now been in place for close to three years it is claiming more and more victims.

Notable business failures this year alone include Debenhams, LK Bennett, Wine Direct, Office Outlet, Steamer Trading, Patisserie Valerie, OddBins and Jamie Oliver’s chain of restaurants. The list is already long and scary enough without adding the big closures of 2017 and 2018.

Factor in the rise in online shopping, and high business rates, and it all adds up to a crisis.

The Arcadia crisis has put Company Voluntary Arrangements (CVA) under the spotlight.

CVAs allow a company to restructure itself without going into a formal administration or liquidation. The theory is that it lets fundamentally decent businesses shed underperforming assets and keep running.

The practice, critics say, is that creditors are kicked in the teeth when their customers use CVAs to escape contracts.

In Arcadia’s case, the firm hopes to cut its overall rental bill (which is says is simply too high in today’s retail environment), and close 23 stores (with another 27 are also earmarked for closure).

Retail chain Sports Direct has just kicked out at CVAs, saying they let “barely managed” businesses limp on. It’s launching a legal challenge to Debenhams’ recent CVA (which thwarted Mike Ashley’s attempts to take the company over).

This is turning into another worrying day for Arcadia’s 18,000 staff, as they wait for news on whether landlords will accept Philip Greens’ CVA proposal or not.

Jobs and pensions are both at risk, says Vishal Makkar, Head of Retirement Consulting at Buck, the pensions consultancy:

“With the traditional British high street struggling in recent years, and both Debenhams and House of Fraser recently calling in the administrators, news of the Arcadia Group potentially entering administration itself should perhaps come as no surprise.

But, surprising or not, Arcadia’s closure will have some very real implications for thousands of people.

With up to 18,000 jobs at stake and a pension scheme deficit of £750m, Arcadia’s staff face the prospect of redundancy and a sizeable cutback in pension benefits, if the Group falls into the Protection Pension Levy (PPF).

This is interesting. Ashley Armstrong of the Telegraph has heard that Arcadia told landlords that it only needs 300 stores, rather than its current 500+ estate.

That suggests further closures, or sales, are possible, even if today’s rescue deal is approved [reminder: Arcadia is currently only planning to shut 50 stores]

Updated

Heads-up.... the Arcadia results may not come until 4pm, an hour later than we thought.

Some food has arrived for the vote counters.....

Retail analyst Patrick O’Brien has put his finger on Arcadia’s fundamental problem -- Sir Philip Green is no longer King of the High Street, and his prize assets now look tarnished.

Oliver Buhus from Paragon Clothing, one of Arcadia’s suppliers, is angry with Arcadia’s landlords for not giving the company more support.

Sky News’s Tom Boadle has the details from outside today’s creditors meeting:

The fact that today’s vote is taking place at all may suggest Sir Philip Green thinks he’s won enough landlords round (he needs 75% support).

But creditors leaving the meeting tell us that the result is still up in the air....

Voting is now underway, to decide the fate of one of Britain’s biggest retail groups.

Arcadia landlords are already leaving the meeting near St Paul’s, so we may hear from them soon.....

The Arcadia meeting is having a short presentation about updates to the CVA and then there will be a vote - the results of which are expected by about 15.00 - possibly later.

One clothing and fabric supplier attending the meeting said he was hoping the CVA would pass. “It wouldn’t be good for our business (if it doesn’t),” he said.

Gerry Matthews of Eternal Design Studio, a clothing supplier, said he was “very much in favour of [the CVA] going through.

But he admitted it was not clear how the vote would play out after Philip Green’s last minute improvement on his offer to landlords.

“He probably plays poker quite well,” Matthews said.

Even Arcadia’s own creditors don’t know how today’s vote will turn out, reports Property Week’s David Parsley.

Updated

Summary: What's happening at Arcadia today.

A quick reminder of what’s happening:

  • Arcadia is presenting its creditors with seven Company Voluntary Arrangements (CVA). They cover all its high street brands brands - Topshop, Topman, Burton Menswear, Dorothy Perkins, Evans, Miss Selfridge and Wallis.
  • Arcadia says that every CVA must pass, otherwise the whole company could be placed into administration. That would threaten 18,000 jobs - although there is speculation that some brands could be saved, with others closing.

Updated

Crown Estate backs Arcadia restructuring

Breaking! The Crown Estate has confirmed that it is backing Arcadia’s restructuring plan today.

That increases the chances that the CVA deal is approved today, sparing Arcadia from administration.

A spokesperson for the Estate, which manages the Queen’s property assets, says:

“While we have voted in favour, we have done so to secure our ability to take control where we feel that a better offer can be delivered for our destinations.

This may include re-letting our spaces to new retailers who are more aligned with our ongoing commitment to creating great places for local communities.”

The meeting on whether to approve, or reject, Arcadia’s CVA restructuring deal is getting underway now.

Here’s the latest chatter from outside the meeting:

If today’s CVA deal fails, Arcadia could plunge into administration ending a history dating back over 100 years.

The story all starts in Yorkshire at the start of the last century, where Montague Burton fled to escape the anti-Jewish pogroms in the Russian province of Kovno. There, he began a tailoring business which grew, thrived, and floated on the stock market in 1929.

Burton’s son then launched Topshop in the 1960s, before Philip Green showed up the scene some decades later.

Here’s the full history:

A small crowd of reporters has gathered outside Etc Venues on Aldersgate, near St Paul’s in central London.

Inside, Arcadia’s creditors will soon start voting on whether to accept the CVA agreement, having rejected it a week ago.

The Queen’s property empire, the Crown Estate, has decided to support Arcadia’s restructuring, my colleague Sarah Butler hears.

That’s a boost for Philip Green. Last weekend, the Estate was locked in talks with Arcadia over today’s CVA votes.

David Parsley of Property Week agrees that Land Securities holds the key to Arcadia’s rescue deal.

Retail Week’s Luke Tugby has heard that the vote, due sometime afternoon, could be extremely close....

Updated

Correction: Land Securities owns 12 Arcadia stores, not 24 as I mis-wrote earlier.

Even so, their vote at today’s CVA will be crucial to the group’s future, and the jobs of thousands of employees.

Here’s the Press Association’s latest Arcadia story, for those looking to get up to speed before today’s CVA vote:

Sir Philip Green’s retail empire faces a make-or-break vote on its future on Wednesday as it seeks approval for its restructuring plans, deciding the fate of 18,000 employees.

Arcadia, the company behind Topshop, Wallis, Burton and a raft of other brands, will reconvene a meeting to vote on seven separate company voluntary arrangement (CVA) proposals.

The votes are for creditors - primarily landlords of the stores - who must either agree to cut their rents by approving the deal, or risk the collapse of Arcadia, leaving them with empty sites and no rent.

Voting was supposed to take place last Wednesday, but was postponed when it became clear that some of the CVA proposals were heading for failure without more concessions from Sir Philip and Arcadia.

It is understood that only those proposals which did not receive enough support at a previous meeting last week will be voted on again.

If passed at a meeting in central London at 12pm on Wednesday, at least 23 stores will close.

A further 25 Miss Selfridge and Evans outlets have also been earmarked for closure as part of a restructuring process that is separate from the CVAs.

Sir Philip has since offered a concession to landlords in a bid to sweeten the deal, proposing to impose less severe rent cuts than originally planned.

Under the initial proposals, shop owners were facing rent reductions of between 30% and 70%. This will now be reduced to a range of 25% to 50%.

It remains to be seen whether enough property owners will be convinced to support the process.

Speaking to the Press Association, one landlord said the Arcadia CVA plans are different from previous ones from House of Fraser or Debenhams because the smaller units would be easier to fill with new occupiers.

“There was some sympathy for Debenhams,” he said.

“Whereas here you’ve got a bigger pool of potential tenants. You’ve got more options so it’s easier to vote against it.

“Not that many people are that emotional about it - there’s no tears for Philip Green.”

Incidentally, the Green family yacht has been sighted -- at Sanrimo, Italy.

Retail experts are watching events at Arcadia closely today.

Analyst Nick Bubb says:

The increasingly embattled Philip Green is scrambling to save his business after further principled resistance from Intu Properties to the Arcadia CVA plan.

Ian Shepherd points out that the crisis in Britain’s high street extends beyond Arcadia:

Lady Tina Green, Sir Philip Green and Chloe Green at the Fashion for Relief cocktail party at the Cannes Film Festival in 2017.
Lady Tina Green, Sir Philip Green and Chloe Green at the Fashion for Relief cocktail party at the Cannes Film Festival in 2017. Photograph: David M Benett#April 2017-March 2018/Getty Images

Some of the opposition to Arcadia’s restructuring plan stems from the fact that the Green family are so stonkingly wealthy.

Lady Tina Green (who actually owns the company) famously collected a £1.2bn special dividend back in 2005. That has helped to support a glamorous lifestyle abroad.... think luxury yachts, private jets and glitzy parties.

Landlords will also have noted that Lady T splashed out £190,000 on a bottle of 1869 Chateau Lafite Rothschild. In her defence, the money went to a cancer charity - but it’s reminded critics that the family won’t be seeking out Monaco’s nearest food bank anytime soon.

My colleague Nils Pratley, though, argues that creditors should look beyond the £100m Lionheart yacht, and approve the deal to keep Top Shop, Miss Selfridge et al running.

Green and his wife paid themselves a £1.2bn dividend from Arcadia in 2005 and could, in any subsequent year, have chosen to hand back some of their winnings to repair the pension deficit. Instead, they still cruise the Mediterranean in a superyacht.

For parallel reasons, you see why Intu is furious. If it agrees rental concessions to a billionaire sunning himself in the waters off Monaco, what’s it supposed to say to other tenants who would also like to pay less? On the other hand, Intu is kidding itself if it thinks it can seriously halt the slide in rental values in retail land. After three upwards only decades, the market has turned.

Neither side deserves to win this CVA fight, in other words. In the absence of an honourable victor, preserving jobs and securing even an underwhelming pensions deal (£175m of cash over three years, plus £210m of securities) should be the priority. Best to allow Arcadia to limp on.

Expert: Deal may be rejected again

Chris Field, independent retail analyst and Chairman of Retail Connections, predicts that Arcadia’s creditors will reject today’s rescue deal.

However, he doesn’t believe this would plunge the company immediately into administration:

“I think they’ll reject Philip Green’s current rescue deal and there will be more discussions, but at some point, the landlords and shareholders are going to have to accept some kind of a deal. The UK retail environment is still a difficult one and, inevitably, there will be some casualties as the High Street reinvents itself.

While the deal remains on a knife edge - and I do foresee the investors turning the knife on the deal - the outcome of Sir Philip’s retail empire is by no means certain.

Things never are as dire as the business owners like to say, and Sir Philip is no fool; this is a a man who won Retailer of the Year just a few years ago and, ultimately, money comes first - this could well be the catalyst for reinvention, rather than the ultimate road to ruin for Arcadia.”

Updated

Video: What's Arcadia crisis about?

The BBC’s Sean Farrington has recorded a handy explanation of today’s vote on Arcadia’s future:

Updated

Screengrab of the fashion website Boohoo

Arcadia’s problems are partly due to the rise in internet shopping. The company’s sales and profits have slumped as shoppers shun the high street in favour of buying online.

Bang on cue, UK online fashion group Boohoo have underlined this -- reporting a 39% surge in revenue in the last three months.

Boohoo, which owns the PrettyLittleThing and Nasty Gal brands, says it is “well-positioned to disrupt, gain market share and capitalise on the global opportunity in front of us.”

In other words, watch out Arcadia!

Property Week agree that the vote of Land Securities (one of the UK’s largest commercial property firms) will be crucial today. They say:

Landsec holds Arcadia’s survival in its hands for the second week in a row.

Even if the commercial property giant abstains, that is expected to be enough to give Sir Philip Green victory.

Updated

Arcadia remains hopeful that landlords will approve its CVA deal today, at the second time of asking.

One insider told Retail Week:

“Arcadia wouldn’t take it to a vote tomorrow if it wasn’t hopeful of getting it over the line. It would have pulled the plug and gone into administration instead.”

The threat of administration looks like Green’s best weapon. He can tell landlords that their choice is lower rent, or no rent at all.

However, this ultimatum rather lost its force last Wednesday when Arcadia delayed the CVA vote in the face of defeat, rather than plunge into administration. That handed power to the landlords, forcing Sir Phil to put more his family’s money into the deal.

With Arcadia’s future up in the air, shoppers would be wise to check their purses and wallets for any gift cards from Top Shop, Miss Selfridge, Dorothy Perkins and Burton.

Should the company fall into administration, such cards might be hard to redeem:

With shopping centre owner INTU opposing the Arcadia structuring, the position of other landlords is now crucial.

Land Securities, which owns 12 24 Arcadia outlets, is a crucial ‘swing voter’, as my colleague Sarah Butler explains:

The likelihood of M&G backing the deal looked slim on Tuesday night after it emerged that the investment company was taking legal action against Debenhams’ CVA which was approved by creditors last month.

However, there were rumours that Aviva was now prepared to back the deal while others, including the Crown Estate, Land Securities and Aberdeen Standard were still wavering. The position of Land Securities, one of the most significant waverers, was also unclear on Tuesday night. Land Securities owns shopping centres including Bluewater in Kent, and One New Change in the City of London.

Sources at one major landlord said they did not think the revised offer was enough and that there was a strong chance the deal would fail.

“There was no consultation before [the new deal was put out]. It was ‘that’s it and we’re off’ … It feels pretty close,” the source said.

Updated

Introduction: Arcadia creditors vote on company's future

Burton and Dorothy Perkins shops at the Rock shopping centre in Bury, Greater Manchester.
Burton and Dorothy Perkins shops at the Rock shopping centre in Bury, Greater Manchester. Photograph: Christopher Thomond/The Guardian

Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.

The future of Sir Philip Green’s retail empire, and the jobs of 18,000 staff, hang in the balance this morning.

The landlords who own Arcadia’s stores across the UK are heading to central London to vote on whether to accept a restructuring plan that will lead to hundreds of job cuts and scores of store closures.

If they reject the offer, then Arcadia could sink into administration - one of the biggest retail failures for years.

Today’s vote is extremely close. We know that because Green was forced to dramatically halt a vote on this Company Voluntary Arrangement a week ago -- once it became clear that landlords weren’t playing ball.

Green has been working the phones since (his famous old Nokia handset must be red hot), trying to twist landlords’ arms to approve the plan.

He has also been forced to sweeten the original deal -- reducing the rent cuts which landlords were being asked to swallow. They now face a hit of 25%-50%, down from 30% to 70% before.

But it may not be enough! Property group INTU has indicated it will oppose the CVA deal again today. That’s bad news for Green - INTU owns 35 Arcadia stores, or around 15% of the vote.

Arcadia needs 75% support to get the restructuring deal over the line, so

One INTU source argues that Arcadia’s proposal isn’t fair.

Arcadia is asking for a significant discount on valuable space, and Intu is not prepared to give way. Intu wants to create a fair environment for all its retailers and taking a huge haircut from one of them is not fair.”

The meeting kicks off at noon, near St Paul’s. By the end of the day, we’ll know if the bell is tolling for Green’s empire, and the jobs of thousands of staff at Top Shop, Miss Selfridge, Dorothy Perkins and Burton.

Also coming up

Trade war jitters continue to dominate the financial markets, as investors wonder if Donald Trump and Xi Jinping will reach a deal at the G20 meeting later this month.

European stock markets are expected to open lower, as recent optimism fizzles...

The latest US inflation data may also move markets, as it could help determine whether America’s Federal Reserve central bank cuts interest rates soon (as Trump is demanding).

The agenda

  • 9.15am BST: European Central bank president Mario Draghi speech on “global headwinds”
  • Noon: Arcadia creditor meeting begins
  • 1.30pm BST: US inflation figures for May

Updated

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