River Island stores in Midlands at risk amid fears fashion chain could collapse
Staff at River Island stores in the Midlands face uncertainty amid reports the high street fashion chain is at risk of collapsing.
The company has laid out a major rescue plan which will see it shut 33 stores and pay reduced rents on a further 71 shops.
However, the fashion retailer needs to secure further funding later this year to avoid collapsing into administration - it has been reported by the Telegraph.
River Island, a staple on the British high street, has a raft of stores in the region including in Wolverhampton, Walsall, Merry Hill shopping centre in Dudley, West Bromwich, Birmingham’s Bullring, Birmingham Fort, Sutton Coldfield, Stafford Riverside and Telford in Shropshire.
Landlords are being asked to cut rents for three years and potentially stop payments on some sites to help stem losses.
The London-based company’s restructuring plan, which will also see it write off parts of its heavy debt pile, needs court approval next month.
River Island needs the backing of 75 per cent of the group’s creditors, predominantly landlords, at a hearing on August 7.
The company said talks with creditors have been positive and it expects to gain approval for the restructuring plan.
However, company documents first reported by the Telegraph warned the business will be “unable to pay its debts” by the end of the month if the plan is rejected.
It indicated the fashion chain will not be able to keep trading if it fails on these payments and would therefore “be subject to administration or other insolvency proceedings”.
The documents also highlighted that the company faces a £10 million “funding need” in September, which could balloon to £50 million by next year.
A spokesperson for 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.”
PwC, which has reportedly been appointed to work on the restructuring plan, declined to comment.
River Island, which employs around 5,500 people, was founded in 1948 under the Lewis and Chelsea Girl brand before being renamed in the 1980s.
