There have been a lot of retail CVAs, restructurings and more that have involved landlords having to swallow low or no rents for a period. And they usually get voted through, despite landlord reluctance. But for River Island, a landlord rebellion derailed the retailer’s plans. And it seems its fate will now be decided by the courts.
River Island
The company’s rescue plan involves 33 store closures, three-year radical rent cuts on another 71 and some debt being written off. But it didn’t get enough support from landlords and lenders (including local authorities that are owed business rates) to get through.
The plan will now go to the High Court after the retailer warned it’s set to run out of money soon.
The plan’s approval would have meant an emergency £40 million loan from its owners-founders, the billionaire Lewis family, would have been made available. But while around 80% of creditors by value voted in favour, a 75% thumbs-up from every individual class of creditor was required and that wasn’t forthcoming as some landlords resisted.
The restructuring will reach the High Court later this week with River Island saying it has been talking to key stakeholders and is confident of getting the plan through.
But on Tuesday, Sky News reported that major landlord British Land “has hire lawyers to scrutinise” both the River Island rescue deal, as well as the deal for Poundland.
Thirteen of its Poundland stores are affected by the plan to rescue it after its sale by Pepco and seven of its stores occupied by River island are also affected. Industry sources told the news site that the lawyer move doesn’t mean British Land will formally challenge the restructurings but such challenges remain an option.
Landlords have often expressed frustration with the situation of failed or struggling retailers demanding rent cuts or rent-free periods as they feel property owners are unfairly carrying the burden of helping stores to get back on their feet with no tangible rewards at the end.
