The business secretary, Alok Sharma, has asked the insolvency watchdog to examine whether the conduct of directors at Sir Philip Green’s fashion empire led to problems for the group’s pension fund.
Arcadia Group, which owns high street brands including Topshop, Dorothy Perkins and Burton, fell into administration on Monday, leaving a pension deficit estimated to be as much as £350m.
Within three months of being appointed, administrators must provide the Insolvency Service with a report on the behaviour of the group’s directors. The agency then considers whether there are grounds for further investigation.
In a letter to Dean Beale, the chief executive of the Insolvency Service, Sharma said: “Given the significance of this case and its implications for thousands of suppliers, pensioners and employees, I would be grateful if you would review this report rigorously.
“If you decide that there are grounds for an investigation, I would ask that it looks not only at the conduct of directors immediately prior to and at insolvency, but also whether any action by directors has caused detriment to creditors or to the pension schemes.”
Boris Johnson also highlighted Sharma’s action in parliament, adding: “We will be doing everything we can to restore the high streets of this country.”
Arcadia’s pension fund is being assessed for entry to the Pension Protection Fund, the industry-backed lifeboat that pays pensioners of collapsed companies.
Under the lifeboat, members who have not reached a pension scheme’s normal retirement age before the date their employer goes into administration could lose 10% of their benefits, even if they have already started taking the pension.
Last year, Green’s wife, Tina, who lives in Monaco and is the ultimate owner of Arcadia, pledged to pay an extra £100m into the group’s pension scheme over three years and signed over rights to property worth £210m.
Despite that deal, there are some concerns that the pension’s funding will fall short because those property assets are likely to have fallen in value.
In addition, Tina Green has so far only paid £50m of the promised additional funding. The company confirmed on Wednesday that final payment was guaranteed to be made next year.