Sir Philip Green’s retail empire could collapse within hours, as a senior source at Arcadia Group told the BBC they do not expect any last-minute rescue deal.
The company, which includes Topshop, Burton and Dorothy Perkins, is set to enter administration on Monday.
That would put 13,000 jobs at risk.
There had been speculation that Mike Ashley’s Frasers Group was offering a £50m loan to Arcadia, but that was dismissed by the Arcadia source.
The company insider told the BBC’s business editor Simon Jack: “If this was about £50m we could find that in five minutes.”
The source added: “This is obviously a sad day, we tried to save it a year ago when £200m was put into the business and the pension fund, but it’s impossible to operate now.
“You don’t know when you’ll be open, you don’t know what stock to buy.”
Arcadia’s brands once dominated High Street fashion, but its chains have been hit hard by store closures caused by the coronavirus pandemic, and the strength of online clothing retailers such as Boohoo and Asos.
This appears to be the end of the road for Sir Philip’s epic retail journey. One that has brought him riches, a knighthood and a government request to use his magic for public sector procurement.
It’s also brought him infamy, public condemnation and lawsuits settled controversially.
He has been branded the “unacceptable face of capitalism”.
But to some he is a skilled businessman and shrewd financier who created thousands of jobs. He can also be generous – providing financial assistance and long-term healthcare support for dozens of his employees.
Sir Philip doesn’t really do humble but I believe he does consider this administration a genuinely sad day for the employees, the business and his own legacy.
In the end he was operating in a world of modern retail that required a completely different skill set to the one he undoubtedly possessed.
Sir Philip is chairman of the Arcadia group, while his wife Cristina is the majority owner of its parent company Taveta Investments.
The couple are worth £930m, according to the Sunday Times Rich List.
Much of their wealth is derived from a £1.2bn dividend payment Sir Philip took from Arcadia and paid to his wife in 2005, two years after buying the business.
Since Lady Green is a resident in Monaco, it was paid to her tax-free.
The BBC understands Sir Philip is on his super-yacht Lionheart, which is docked in Monaco’s harbour. He has so far declined requests for an interview.
A BBC reporter in the principality said there was no sign of Sir Philip on deck, but crew members were busy cleaning the 90m-long vessel.
Adding to the uncertainty facing the thousands of Arcadia staff is an estimated £350m hole in the company’s pension fund.
The chair of the Work and Pensions Committee Stephen Timms has called on the Green family to plug the gap.
The Labour MP said: “This is a dreadful time for Arcadia staff to be worrying about their jobs and their pensions.”
“Whatever happens to the group, the Green family must make good the deficit in the Arcadia pension fund,” he said.‘No last minute rescue’ for Topshop owner Arcadia
Mr Timms said he would raise the matter with the Pensions Regulator on Monday.
Pensions consultant John Ralfe told the BBC that if Sir Philip chose to use his personal wealth to plug the hole in the Arcadia pension pot, that would ensure workers enrolled in the scheme receive their full pension.
But Mr Ralfe said even if the retail magnate did not do that – or if he writes a cheque that is substantially less than £350m – Arcadia workers should still receive most of their pension entitlement through the Pension Protection Fund.
“The good news is the government has a lifeboat – the Pension Protection Fund – which is designed to make sure that people get compensation if their company goes bust,” he said.
“The compensation they get isn’t the full 100% of the pension promise they were expecting, but it’s not far short.”
Mr Ralfe has previously said Sir Philip seemed to have “learnt his lesson” from the pension scandal involving BHS a few years ago.
Sir Philip sold the now-defunct department store to businessman Dominic Chappell in 2015 for £1, but a year later it collapsed. Around 11,000 people lost their jobs and the company was found to have a pension deficit of £571m.
Sir Philip later reached a deal with the Pensions Regulator – which accused him of selling BHS to avoid responsibility for the deficit – to inject £363m into the scheme.
Commentators say the situation with Arcadia is very different and point to the fact that last year Lady Green agreed to pump £100m into Arcadia’s two pension schemes over three years.
Labour’s Stephen Timms said he will write a letter to the Pensions Regulator on Monday, “to underline the importance of securing the interests of [Arcadia Group’s] pension scheme members”.
The Pension Regulator and the Pension Protection Fund are understood to be staying closely informed of decisions affecting Arcadia Group.
The imminent collapse of Arcadia could also have implications for Debenhams, scuppering a potential sale of the department store chain to JD Sports.
Arcadia is the biggest concession in Debenhams, accounting for around £75m of sales.
JD Sports had been closing in on a rescue deal to buy Debenhams, which is currently in administration for the second time in a year. It has already cut some 6,500 jobs since May.
Debenhams now has around 12,000 employees across 124 stores.
According to a source close to the JD Sports, the appointment of administrators to Arcadia would give the company “more to think about”.
A final decision is expected within days.