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All seven Arcadia CVAs implemented with support from key landlords

Freshfields advises Arcadia on its highly complex seven CVAs and pensions restructuring

  • Arcadia’s complex group structure meant that seven CVAs were required to achieve the restructuring
  • The CVAs were implemented in parallel with an interlocking series of pensions-related agreements with the group, the majority shareholder and the group’s lenders
  • The successful implementation of the restructuring provides Arcadia with a stable platform from which to achieve its business plan

On 12 June 2019, creditors voted to approve seven company voluntary arrangements proposed by the Arcadia group’s two main operating companies and five property-holding companies (propcos).

Seven CVAs were required due to the complex structure of the group, with a number of different propcos holding leases on behalf of the group’s various brands. This meant that, for the propco CVAs, landlords constituted a very significant majority of the total creditors eligible to vote: unusually, these CVAs required a high level of landlord support to pass. The group worked with its key landlords to propose CVAs that balanced the interests of all stakeholders.

High complexity

Due in large part to the number of CVAs, this was a highly complex transaction. The different CVA companies had different creditor profiles. Certain CVA companies had creditors in jurisdictions across the world.  To establish how to treat such creditors required the Freshfields team to work with colleagues in other offices, as well as other law firms in a number of jurisdictions. Some of the unique features of the CVAs include a right for compromised landlords to share in net proceeds of an exit of all or part of the group and the largest compromised creditors’ fund ever seen in a CVA context, funded by the group’s majority shareholder.

Pensions and financing deal

In parallel with the CVAs, Freshfields and representatives of the Arcadia group negotiated an agreement with the Pensions Regulator, the Pension Protection Fund and the trustees of Arcadia’s defined benefit pension schemes. The agreement, key terms of which were conditional on the CVAs passing, involved a reduction in annual deficit repair contributions. In return for this, the group granted security to the pension schemes and the group’s majority shareholder will make direct contributions to the schemes.

The CVAs also required the agreement of the group’s lenders, who provided an extension to the group’s key bank facilities as part of the restructuring.

US business

Part of the turnaround plan for the group involved closing Topshop/Topman’s US business, which had struggled in the face of challenging conditions in the US market. Ultimately, the US retail store business was unsustainable. It was held by an English company which Freshfields placed into administration in England, with Chapter 15 recognition sought in the space of a few hours. DLA Piper are advising the administrators.


We have advised on a number of the most significant CVAs of recent years; the Arcadia CVAs follow closely on the Debenhams CVAs, on which Freshfields are also advising.