River Island restructuring hangs in balance as landlords reject key proposal

River Island faces an uncertain future after its proposed restructuring plan failed to win support from all classes of creditors in a court-supervised vote. Despite achieving about 80 per cent approval by value from its creditors, the company fell short of the mandatory 75 per cent threshold required from each group, including landlords, trade creditors and business rate authorities, for automatic court sanction.

This setback leaves the UK high street fashion retailer’s fate in the hands of a judge, who will determine at a hearing on Thursday whether the plan offers a fair and reasonable outcome. Resistance to the proposal was particularly strong among landlords, as the plan includes provisions to slash rents—potentially to zero—across parts of River Island’s 230-store estate. The company also intends to close 33 stores and write off a significant portion of its debt as part of efforts to secure its financial stability.

River Island’s founding Lewis family, through Blue Coast Capital, has pledged a £40 million funding facility should the restructuring plan be approved. Blue Coast is also the retailer’s biggest creditor, with exposure totalling £270 million. The business has warned creditors that failure to approve the plan could lead to administration as early as September, reflecting the gravity of its situation.

As cost of living pressures intensify and online-only competitors such as Shein and Temu continue to capture market share, River Island has struggled to maintain relevance. Revenue declined by 15.1 per cent to £701.5 million in the year to December, down from £825.8 million in 2022. Higher wage costs and evolving consumer tastes have added to the company’s challenges, leading to a pre-tax loss of £32.3 million during the period—reversing a previous year’s profit of £7.5 million.

River Island, established in north London in 1948 by Bernard Lewis and now one of Britain’s best-known high street names, has tried to reposition itself amidst rapid shifts in retail. Company spokespeople remain confident of obtaining court approval, stating that the restructuring is a proactive measure crucial for River Island’s continued existence. The judge will weigh the high level of creditor support against the objections raised by specific groups before making a final decision this week.