River Island faces collapse “within weeks” unless restructuring plan is approved
River Island is at risk of collapse “within weeks” unless its rescue plan is approved by landlords and creditors, according to The Telegraph.
The fashion retailer announced last month that it was planning to close 33 of its 230 stores as part of the proposed restructuring. This also includes proposals to cut the rents on a further 71 shops, which could also be at risk of closure.
The rescue plan will be put to the High Court next week. If it gains the approval of three quarters of River Island creditors, the retailer’s founders, the Lewis family, will release an emergency loan to enable the retailer to pay its bills.
However, River Island has told creditors it will run out of cash by the end of next month if the plan is rejected, leaving it “unable to pay its debts as they fall due”. It also admitted that it “will not be able to continue trading as a going concern”.
Subscribe to TRBThe restructuring plan has been drawn up by River Island advisers PwC and stretches to 800 pages, according to The Telegraph. The document also shows that the retailer faces a £10 million “funding need” in September.
The Telegraph has reported that some industry sources have said the proposals face opposition from some quarters.
A spokesman from River Island said: “River Island circulated its proposals for a restructuring plan to creditors on June 20. 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.”
River Island employs 5,300 people in its stores and 950 at its head office.
