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River Island is reportedly at risk of collapse within weeks unless landlords and creditors approve a major rescue plan, according to the Telegraph.
The retailer has proposed a restructuring strategy that includes closing 33 stores, reducing rents on 71 more, and writing off debts to avoid a cash crisis.
If 75% of creditors back the plan, which will be presented before the High Court next week, River Island will unlock an emergency £40m loan from its founders, the Lewis family, through their investment firm Blue Coast Capital.
The company told the Telegraph it has been left with “a large portfolio of stores that is no longer aligned to our customers’ needs”.
According to the outlet, without approval the business could run out of cash by the end of August, leaving it “unable to pay its debts as they fall due”. In that case, River Island told the outlet that it “would not be able to continue trading as a going concern” and would likely enter administration or other insolvency proceedings.
The proposals, reportedly outlined in an 800-page document prepared by advisers PwC, show the chain expects a funding shortfall of £10m in early September, rising to £50m by year-end.
River Island employs 5,300 staff across its store network and 950 more at its head office in west London. The group blamed rising operating costs and a shift to online shopping for its current difficulties.
The proposed rescue package reportedly includes rent reductions of between 25% and 75% on some locations, with landlords of 24 stores asked to accept zero rent for three years.
The Telegraph also reported that River Island is seeking relief from outstanding business rates and debts linked to more than 30 leased company vehicles, including British Land, the Crown Estate and Frasers Group.
A spokesperson for River Island told Retail Sector: “River Island circulated its proposals for a restructuring plan to creditors on 20 June.
“In combination with the company’s ongoing Transformation Strategy, the plan is a proactive measure to place the company on a firm footing. We have been having positive conversations with key stakeholders and are confident that we will achieve approval of the plan in the next few weeks.”
