High street fashion chain River Island is reportedly on the brink of collapse unless a rescue deal is agreed within weeks, putting hundreds of jobs at risk. The retailer has proposed a restructuring plan that would see 33 of its 230 UK stores close by January next year, with rents slashed on a further 71 shops and debts written off to avert a severe liquidity crisis.
The plan, drawn up by accountancy firm PwC, will be put to the High Court next week. If approved by 75% of creditors, it will unlock an emergency loan from the billionaire Lewis family, the company's founders. However, if rejected, River Island could run out of cash by the end of August, leaving it unable to pay its debts and facing administration or insolvency.
River Island faces a £10 million funding shortfall in early September, which could rise to £50 million by Christmas, according to an 800-page report from PwC. Creditors affected include British Land, the Crown Estate, and Mike Ashley's Frasers Group, as well as local councils. Some landlords have expressed resistance, accusing the family-run business of overexpansion.
A River Island spokesman said the company is confident of achieving approval for the plan, which is a proactive measure to place the firm on a firm footing. CEO Ben Lewis blamed the closures on the shift from high street to online shopping and rising costs, stating that the store portfolio is no longer aligned with customer needs.
