This article is more than 1 year old

This article is more than 1 year old

Sir Philip Green’s family has been asked to pump another £50m into the pension scheme of his ailing retail group in order to secure a financial rescue of the business.

Green, formerly dubbed “the king of the high street”, employs 18,000 workers and is battling to save his Arcadia Group after a collapse in sales and profits at its fashion chains, which include Topshop, Burton, Dorothy Perkins, Miss Selfridge, Wallis, Evans and Outfit.

At a meeting in London on 5 June, creditors of the group will vote on a series of company voluntary arrangements (CVAs), a form of insolvency which enables store closures and rent cuts.

The rescue package needs the backing of the Pensions Regulator (TPR), which has said that an initial £360m funding plan for the pension fund did not adequately protect the 9,500 members of Arcadia’s legacy defined benefit pension schemes.

If the CVA does not go ahead, Arcadia has said it is “highly likely, either immediately or after a short time period, to enter into insolvent administration or liquidation”.

It is understood the regulator, which has legal powers to force Arcadia and Green to ensure its pension is properly funded, wants a further £50m on top of the £360m package offered by the Greens and Arcadia group over three years, as first reported by Sky News.

The regulator and trustees of Arcadia’s two legacy pension funds, which have a deficit of up to £750m, will be highly influential in the vote as the scheme is Arcadia’s largest unsecured creditor.

Arcadia wants to halve payments to its legacy pension funds, which have a deficit of at least £537m, to £25m a year for three years as part of a rescue package announced on 22 May.

In compensation, Green’s Monaco-based wife, Tina, who is the formal owner of the business, has so far agreed to top up the pension fund with £100m of additional cash over the next three years to help bridge a deficit that could balloon to about £750m if the company were to go bust.

Arcadia has also offered the trustees of the funds, which were closed to new savers some time ago, security over £185m of unnamed assets, understood to include Topshop’s London flagship store, which is worth about £400m, but has a mortgage of more than £300m.

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Arcadia recently extended the mortgage deal on the store, which was due to expire in June, until December to give it time to secure the CVA and negotiate a new mortgage.

The latest battle with the pension regulator comes just over two years after Green agreed to put £363m into the pension scheme of BHS, the department store group which collapsed about a year after he sold it for £1 to a former bankrupt.

Since then, Green’s Arcadia empire has struggled to compete against fast-growing online specialists such as Boohoo and Asos as well as cheaper rival Primark.