Nov 29, 2020

HMRC could narrowly lose out in expected Arcadia collapse

The UK's tax authorities could miss out on substantial revenue if Philip Green's Arcadia fashion empire goes into administration as expected on Monday. Arcadia declined to comment on the timing of the administration. If Arcadia enters administration before Tuesday, HMRC's claims will rank below those of so-called "Floating charge" creditors, who may have security over things such as inventory or cash balances, and alongside those of other unsecured creditors such as suppliers or landlords. As part of the company voluntary arrangement agreed with creditors last year Lady Green - the ultimate legal owner of Arcadia - lent the group £50m, secured on one of the group's distribution warehouses, and provided £40m to compensate landlords and £10m of additional equity. In many insolvencies the pension fund is also classed as an unsecured creditor but, under an agreement struck last year, Arcadia's pension scheme has fixed-charge claims on various assets in the group.

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