A fashion chain with stores in Kent could face collapse within weeks.
River Island, which has stores in Broadstairs, Canterbury, Maidstone and Bluewater, has reportedly put forward a proposal to close 33 branches and to “slash the rents on a further 71 shops” to “write off a series of debts,” reports say.
The retailer was founded in 1948 under the Lewis and Chelsea Girl brand before being renamed in the 1980s. A plan is set to be put before the High Court next week.
If it is approved by three-quarters of the retailer’s creditors, the Lewis family will provide an emergency loan so the company can pay its bills, according to the Daily Telegraph.
But if the plan is rejected, the retailer will run out of money by the end of next month.
The company has told creditors that, in this instance, it will be left “unable to pay its debts as they fall due.”
This will mean it “will not be able to continue trading as a going concern” and “would be subject to administration or other insolvency proceedings.”
A formal restructuring plan has been drawn up by the chain’s advisers PwC.
The chain, which also has branches in Bexleyheath and Bromley, employs 5,300 people in its stores across the country – as well as 950 at its head office
It has blamed the situation on “a sharp rise in the cost of doing business over the last few years” and the rise in online shopping.
PwC will need to convince 75 per cent of River Island’s creditors to back the rescue plan, which would allow the company to “walk away from a slew of debts, including tens of millions of pounds in outstanding rents to landlords.”
However, The Telegraph has reported that several industry sources have claimed the proposals face opposition from some quarters.
The company is proposing three-year rent cuts of between 75 per cent and 25 per cent for the stores that would remain open.
The owners of 24 stores are being asked to accept zero rental payments.
A River Island spokesperson 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.”
Last month, it was reported that hundreds of jobs were at risk at River Island as part of plans to shut more than 30 of its UK outlets.
River Island fell to a £33.2 million loss in 2023 after sales slid by 19%, according to its most recent set of accounts.
It is not yet known which stores will be closing.
