River Island has got the green light for a rescue restructure that saves more than 4,000 jobs but will shut 33 of the clothing chain’s 230 stores as people shift to buying online.
The plan to reduce costs, which still puts more than 1,000 jobs and a further 70 sites at risk, won approval of a high court judge on Friday after a majority of creditors gave their backing earlier in the week.
There had been fears the family-owned company could collapse after it told creditors in June that if a restructure was not approved it could run short of cash by the end of August and would be “unable to pay its debts as they fall due”.
Ben Lewis, the retailer’s chief executive, said the approved plan, which involves a sharp reduction in rent payments, would enable the company to “align our store estate to our customers’ needs. He said: “We are pleased that River Island’s restructuring plan has been approved by the high court.
“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.”
There had been a question over whether the court would approve the deal as fewer than 75% of landlords, one class of creditors, did not back the plan in the online vote this week.
The decision protects the future of a high street fashion stalwart that has outlived rivals from Topshop to Oasis, Ted Baker and Warehouse, all of which trade solely online in the UK.
Fashion retailers are facing heavy competition from cheap, fast-growing online players including Shein and Temu, which benefit from a tax break on imported goods sent straight to shoppers.
River Island, formerly known as Chelsea Girl, began selling clothing under the name Lewis’s in the 1940s.
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In a plan first announced in June, the retailer said it needed £10m in funds by the second week of September. It warned that that figure could rise to £50m by the end of the year.
River Island said it would not be able to continue trading as a going concern and would be subject to administration or other insolvency proceedings if it could not agree a deal to slash rents and close some stores.