Plans for an emergency multimillion-pound loan to Sir Philip Green’s struggling Arcadia Group have reportedly fallen through.
Sir Philip’s retail empire, which includes the Topshop, Dorothy Perkins and Burton brands, has been revealed to be on the brink of collapse with around 15,000 jobs at risk.
Senior sources at the company have told the BBC they do not expect a last-minute rescue deal, which had been flagged by Mike Ashley’s Frasers Group.
MPs and unions have called on Sir Philip to use his personal wealth to cover an estimated £350 million shortfall in the company’s pension scheme ahead of the expected collapse.
The UK taxman could also lose out if the company goes bust on Monday. It would come ahead of new rules next month which would make HMRC a preferential creditor and improve its chances of securing substantial revenue from the retail group’s insolvency.
The offer from Frasers Group, which runs Sports Direct and House of Fraser, amounts to a £50 million loan, Mr Ashley’s company confirmed.
Frasers Group said: “The company can confirm that it has made an offer and provided draft terms to the Arcadia Group for a loan of up to £50 million and is now awaiting a substantive response.
“Should the Company and the Arcadia Group’s efforts to agree an emergency funding package fail and the Arcadia Group enter into administration, the company would be interested in participating in any sale process.”
Sky News quoted Chris Wootton, Frasers’ chief financial officer, as saying: “We hope that Sir Philip Green and the Arcadia Group will contact us today to discuss how we can support them and help save as many jobs as possible.”
Arcadia had been in emergency talks with lenders in a bid to secure a £30 million loan to help shore up its finances.
It is estimated that around £250 million worth of supplier invoices to Arcadia could go unpaid if there is no rescue deal, according to insurance specialists Nimbla.
The company said this could have a ripple effect which could “threaten the existence of hundreds of small businesses and jobs” further down the supply chain.
It is the latest retailer to have been hammered by the closure of stores in the face of coronavirus, with rivals including Debenhams, Edinburgh Woollen Mill Group and Oasis Warehouse all sliding into insolvency since the pandemic struck in March.
The group has more than 500 retail stores across the UK with the majority of these currently shut as a result of England’s second national lockdown, which will end next week.
Earlier this year, Arcadia revealed plans to cut around 500 of its 2,500 head office jobs amid a restructure in the face of the coronavirus crisis.