The site at Leeds Birstall Park is among 33 to shut<\/p>\n
The River Island at Leeds Birstall ParkAuthor: Danny Halpin, PAPublished 19 minutes ago<\/p>\n
Dozens of River Island stores, including one in Leeds, are going to close as part of a restructuring aimed at saving the chain collapsing into administration.<\/p>\n
The clothing retailer is looking to secure further funding later this year to avoid falling into millions of pounds’ worth of debt – with the High Court approving the plan earlier.<\/p>\n
The London-based company has laid out a rescue deal which will see it shut 33 stores and pay reduced rents on another 71 shops. <\/p>\n
The site at Leeds Birstall Park is among those to shut.<\/p>\n
Landlords are being asked to cut rents for three years and potentially stop payments completely on some sites in a bid to stem losses. <\/p>\n
Matthew Weaver KC, for River Island, told a hearing on Friday that the company “simply has not been able to reverse” a trend of financial difficulty. <\/p>\n
In written submissions, he cited a decline in footfall and sales due to “the pressures of a highly competitive and changing retail environment as well as the prevailing trend away from high street retail stores to online shopping”. <\/p>\n
He added: “A number of geopolitical events have also resulted in continuing supply chain disruption which, together with energy, labour and other price increases, has resulted in a cost base that’s too high and unsustainable at its current level.” <\/p>\n
After a meeting on August 1, five of the 10 classes of creditors approved the rescue plan, meaning River Island had to gain approval from the High Court to move forward. <\/p>\n
No one appeared at the court hearing on Friday to oppose the proposals. <\/p>\n
Mr Weaver said that if the plan were not sanctioned, the “most likely scenario” is that River Island would “enter into an insolvency process within which there would be a sale of the stock, brand and intellectual property”. <\/p>\n
He also said that River Island was forecast to be unable to pay its debts from late August or early September, with a projected shortfall of more than \u00c2\u00a343 million. <\/p>\n
The company is seeking funding of \u00c2\u00a354 million to make it more financially stable. <\/p>\n
River Island has 223 stores across the UK and Ireland although none of the Irish stores are facing closures, Mr Weaver said. <\/p>\n
In response to recent correspondence from some creditor landlords, Mr Weaver said there “may well be an attempt by those landlords to extract value from the plan company by taking a ransom position”. <\/p>\n
He added: “In essence, the transformation plan seeks to address the root causes of the difficulties facing the group and to reposition River Island for long-term success. <\/p>\n
“It involves a combination of operational improvements, cost rationalisation and strategic investment, all of which are critical to restoring profitability, improving cash flow, and safeguarding jobs.” <\/p>\n
Sir Alastair Norris approved the restructuring plan, with a written judgment due at a later date. <\/p>\n
River Island employs around 5,500 people and was founded in 1948 under the Lewis and Chelsea Girl brand before being renamed in the 1980s.<\/p>\n