Sir Philip Green has agreed to inject an extra £25m into Arcadia’s pension fund ahead of a crucial vote to secure the future of the retail giant.
Sir Philip must get the backing of the Pensions Regulator before creditors vote on his plan to save the group which owns Topshop, Topman and Burton.
On Wednesday, creditors will decide on a deal that will see 50 shops close.
The restructuring will need the backing of landlords who would have to agree to a rent cut on Arcadia’s stores.
The Pensions Regulator declined to comment.
The restructuring would be done through a company voluntary arrangement (CVA), an insolvency process that allows a business to reach an agreement with its creditors to pay off all or part of its debts.
The Pension Protection Fund, which represents the Pensions Regulator and the Arcadia pension fund trustees, will vote on the CVA on Wednesday.
Its support is vital for Sir Philip to secure approval for his rescue plan.
If the creditors vote against the plans to shut stores and cut rents, the High Street giant could go into administration.
Consumer expert Kate Hardcastle said the pension deficit has been “one of the biggest pressures” on Arcadia.
“It might change a few minds absolutely,” she said. “But I’d still say the result of the CVA vote is not certain. This will alleviate a lot of concerns, however.”
Sir Philip’s wife, Lady Tina Green, who is Arcadia’s main shareholder, had already offered to put in £100m of funding over the next three years to help plug the pension deficit, which is around £750m.
It was part of a £360m package to make up for planned reductions in contributions resulting from the restructuring deal.
The Pension Regulator said this wasn’t sufficient.
Arcadia currently has more than 560 shops across the UK and Ireland, and employs 22,000 staff.
It has already shut 200 of its UK stores over the past three years amid intensifying competition from a crop of more contemporary “fast fashion” retailers ranging from High Street chains such as Zara and H&M to pure online players like Asos.
Arcadia has also faced the same problems as other High Street retailers, including rising business rates and labour costs, too many unprofitable stores and inflexible leases that make it hard to close failing shops.
By Colletta Smith, BBC consumer affairs correspondent
Philip Green’s retail empire dressed a generation.
In my teenage years almost every Saturday was spent moving from one Arcadia store to another – from crowding into Miss Selfridge photo booths for pictures with friends to fawning over the Kate Moss collection in Topshop.
But times have changed.
Today’s teenagers have grown up expecting to order clothes to their home and buy them on their phone.
Boohoo, Misguided, and PrettyLittleThing have so many cheaper items available that they’ve hooked a younger generation who expect to wear an item once, post a picture on Instagram and then buy something else for the next Friday night.
But Arcadia hasn’t held onto those in their 30s who were loyal for years.
The fact that Topshop haven’t stocked above size 18 in their stores is alienating for women with changing body shapes.
The campaign to boycott TopShop after the removal of a pop-up stand promoting a book on feminism did the company no favours. Negative publicity about Sir Philip Green has done nothing to help a business so closely associated with him personally.
For many in an age group increasingly conscious about the impact of their spending, the teenage crush on Topshop is over.
Ms Hardcastle said even if the rescue deal is passed, Arcadia will still have a lot more work to do.
“There is a lot of fat within the Arcadia group and it faces a lot of challenges. It is hard to look at the business and say that anything will be the saviour of the organisation.
“It is a pretty wobbly table and people will look at how many legs it needs to prop it up.”