Sir Philip Green is working on a plan to turn around his ailing Arcadia high street empire, which could lead to job losses and store closures.

The embattled billionaire is the latest high street business owner to explore a company voluntary arrangement (CVA), a form of insolvency used to jettison unwanted stores and seek reduced rents.

Profits at Topshop owner Arcadia have fallen sharply in recent years as the fashion group, which has about 570 shops and hundreds of department store concessions, has lost young shoppers to online stores such as Asos and Boohoo.

Topshop, once the jewel in the crown, has fallen out of favour with today’s teenagers and twentysomethings. Arcadia’s other brands, which include Wallis, Miss Selfridge and Evans, have found conditions even tougher.

Several other struggling chains, including New Look, Mothercare and Carpetright, deployed CVAs last year to reduce the size of their chains and cut rental costs against a challenging backdrop of rising costs and falling sales. They are typically a last resort by businesses that otherwise face administration. House of Fraser and BHS, which was sold by Green a year before it collapsed, both embarked on one but went on to collapse anyway.

With a personal fortune of £2bn, Green could face an uphill struggle to persuade landlords to lower rents or take back the keys to unwanted shops. After the fallout from the collapse of BHS, there will also be a sharp focus on the health of the Arcadia pension fund and how it would be affected by any restructuring.

In a statement on Friday night, Arcadia said: “Within an exceptionally challenging retail market and given the continued pressures that are specific to the UK high street we are exploring several options to enable the business to operate in a more efficient manner. None of the options being explored involve a significant number of redundancies or store closures. The business continues to operate as usual including all payments being made to suppliers as normal.”

Green’s reputation was shredded by the high-profile collapse of the BHS chain. The tycoon owned the chain for 15 years before selling it to serially bankrupt Dominic Chappell for £1 in 2015. A year later it collapsed with the loss of 11,000 jobs.

The demise of BHS prompted an inquiry by MPs and the pensions regulator into how the business had been managed and financed in the period before its collapse.

The retailer had a pension deficit of £571m when it failed. After months of pressure, Green eventually agreed to hand over £363m to the scheme in a deal with the regulator.

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More recently, the businessman has been under scrutiny over accusations of inappropriate behaviour by former staff members. He is alleged to have subjected people working in his business to abuse and other inappropriate behaviour that was at times allegedly racial, physical and sexual.

The allegations were reported by the Daily Telegraph after an injunction obtained by Green was lifted. In some cases, he is alleged to have paid people large sums of money in return for their silence.

Reports that Green wanted to restructure his store empire surfaced in January when it was suggested that up to 200 stores, which have leases nearing expiry, could be axed. On Friday, Sky News reported Arcadia’s chief executive, Ian Grabiner, intended to launch the cost-cutting programme in late April or early May.

A CVA must be backed by creditors – a group that includes landlords as well as the company pension fund – owed 75% of the debt. In some cases the pension scheme is the biggest creditor, so winning the support of the pension protection fund, the industry-funded pensions lifeboat, which has the power to veto a CVA, will be critical for Green.

In 2017 MPs were told that Arcadia’s two pension schemes had a combined deficit of nearly £1bn on a buyout basis and £565m as a going concern. The company pays about £50m a year into the schemes.

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The problems mark a dramatic decline in fortunes since 2005, when the Greens famously paid themselves a dividend of £1.2bn from Arcadia, which still holds the record as the biggest such payout in British corporate history. There was no dividend last year, let alone one with so many zeros, after a slump that saw the group’s turnover decline by £113m to £1.9bn.

If creditors refuse to approve a CVA, analysts said Green’s other options could include offering lump sum payments to landlords to terminate leases early or putting more cash into the business himself.