Arcadia in crisis
Top Shop collapse may leave £250m trail of unpaid bills
Top Shop’s fate is in the balance (pic: Terry Murden)
Arcadia’s collapse is expected to cost suppliers £250 million in unpaid invoices, it has been claimed.
The failure of Sir Philip Green’s Top Shop to Burtons empire could take down a number of smaller firms in the supply chain.
Flemming Bengtsen, CEO at invoice insurance business Nimbla commented: “The much needed injection of cash into UK businesses via CBILS and BBILS has succeeded in staving off insolvency for many SMEs.
“However it has also created a wave of “zombie” companies that have little realistic chance of survival. Arcadia’s collapse highlights the danger of a domino effect as defaults on trade credit trigger others to fail. We estimate as much as £250m of unsecured debts will be left behind to Arcadia’s suppliers.
“SMEs are in a precarious position; heavily leveraged and unable to withstand further stress to their business.
“They require their suppliers to offer credit terms as they cannot borrow more and in equal measure, they cannot afford for their debts to go unpaid.
“The average amount of bad debt SMEs said would tip them into insolvency was £30k before COVID19. That number is undoubtedly much lower now. Arcadia sadly is just the tip of the iceberg as many more defaults can be expected in 2021. The scheme is set to end 31st Dec 2020.”
Nimbla is calling for the Government to extend the Trade Credit Insurance Reinsurance Scheme until such time as the effects of the crisis and the stimulus have worked their way through the system.
Flemming Bengtsen added: We want to see these companies genuinely recover, if they can. What we must prevent is them dragging others down with them.”
The company employs around 13,000 people and is behind high street brands such as Topshop, Burtons and Dorothy Perkins.