River Island has been saved from collapsing into administration.
Its restructuring plan has been approved by a High Court judge today as the clothing brand tries to save the business after suffering heavy financial losses.
As part of the plans, 33 of its 223 branches across the UK are set to close by January 2026.
It made a £33.2million loss in 2023 after sales dropped by 19%, according to River Island’s most recent set of accounts.
Ben Lewis, River Island CEO, said: ‘We are pleased that River Island’s restructuring plan has been approved by the High Court.
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‘We have a clear transformation strategy to ensure the long-term viability of the business, and this decision gives us a strong platform to deliver this.
‘Recent improvements in our fashion offer and shopping experience are starting to show results, and the restructuring plan will enable us to align our store estate to our customers’ needs.
‘We are grateful to our suppliers, landlords and other stakeholders for their constructive engagement and shared confidence in River Island’s future.’
Matthew Weaver KC, representing River Island at the High Court, said the company ‘simply has not been able to reverse’ a trend of financial difficulty.
He blamed a decline in footfall and sales caused by ‘the pressures of a highly competitive and changing retail environment as well as the prevailing trend away from high street retail stores to online shopping’.
He warned that if the plan was not sanctioned, the ‘most likely scenario’ is that River Island would ‘enter into an insolvency process within which there would be a sale of the stock, brand and intellectual property’.
The business was forecast to be unable to pay its debts from late August or early September of this year, with a predicted £43million shortfall.
Its restructure plan will see 33 shops closed and rents reduced at 71 of its other branches.
Landlords are being asked to cut rents for three years and potentially stop payments completely on some sites in a bid to stem losses.
Full list of 33 River Island branches set to close
- Aylesbury
- Bangor Bloomfield
- Barnstaple
- Beckton
- Brighton
- Burton-Upon-Trent
- Cumbernauld
- Didcot
- Edinburgh Princes Street
- Falkirk
- Gloucester
- Great Yarmouth
- Grimsby
- Hanley
- Hartlepool
- Hereford
- Kilmarnock
- Kirkcaldy
- Leeds Birstall Park
- Lisburn
- Northwich
- Norwich
- Oxford
- Perth
- Poole
- Rochdale
- St Helens
- Stockton On Tees
- Surrey Quays
- Sutton Coldfield
- Taunton
- Workington
- Wrexham
Michelle Quinn, partner at Grosvenor Law, told Metro: ‘As expected, the High Court in London has sanctioned the River Island restructuring plan over the objections of the landlords.
‘The landlords faced an uphill battle in court, and the alternative was likely to be an insolvent administration with the company rumoured to run out of cash at the end of the month.
‘Absent any successful appeal, the landlords will now be subject to what is called a “cross-class cram down” meaning that the restructuring plan will be imposed on them despite their objections.
‘One hopes that the restructuring plan works, to ensure that a staple of the High Street remains for years to come.’
River Island has about 5,500 employees and was originally founded in 1948 under the Lewis and Chelsea Girl brands.
It was renamed to River Island in the 1980s.
The hundreds of staff at risk will be consulted with, and the business said it would attempt to redeploy as many people as possible elsewhere, to reduce the number of redundancies.
Kathleen Garrett, insolvency and restructuring expert at Reed Smith, told Metro: ‘Today’s judgment from the High Court felt pretty inevitable but was by no means a slam-dunk.
‘This is the latest in a series of judgments that have seen the courts prioritise rescuing a business over the interests of creditors, especially where it comes to use of cross-class cram down to compromise landlord claims where necessary to facilitate a company’s rescue.
‘To put it simply, the attitude of the courts is clear and commercial landlords are potentially exposed.
‘Given the way the legal winds are blowing, landlords should make sure they take further steps to protect themselves when entering leases.
‘Ensuring appropriate forfeiture triggers as well as taking collateral from tenants will mean they are in a much stronger position during a restructuring.
‘It’s one thing to say this, but the commercial realities of the present market may make this a challenging demand.’
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