River Island still confident of High Court decision despite creditor backlash at vote

Retail Week understands that 80% of creditors backed the restructuring proposals overall, but because of the way the vote was structured – with 10 classes representing everything from the UK’s largest, institutional landlords through to single store landlords, business rates creditors and secured lenders – not every individual landlord class hit the 75% threshold required to carry the proposals.

The failed vote heaps further pressure on the ailing fashion retailer, which now faces a nervous wait for the High Court to make its final ruling on Thursday.

“Because of the way the vote was structured, River Island needed to get 75% in all 10 classes for it to pass,” a source close to the retailer told Retail Week. “It received around 80% of the total votes in favour, but because not every class passed that threshold, it means that the High Court ruling won’t be a formality on Thursday”.

The plan creditors for the restructuring include the secured lender, and then seven categories of landlord, split in classes - with class A landlords, class B1, B2, B3 and B4 landlords, and then C1 and C2 landlords. There are also the business rates creditors and the general creditors. At the vote, at least 75% of each landlord class would have needed to vote in favour of the proposals for them to carry, which didn’t happen.

Despite failing to convince all of its creditors about its turnaround plans, the source said River Island is still “confident” about the High Court’s decision and said there was a “high level of support” amongst larger landlords and other creditors more generally.

The source also said that River Island never expected 100% of landlords to back the proposals, as there were always going to be those who voted against it.

“If you’re a single-site landlord and you’re being asked to take a 20% or 30% rent cut, you’re more likely to vote against the proposals than an institutional landlord who understands what’s happening in the wider economy and the high street and has multiple stores”, they said.

A River Island spokesman added: “River Island circulated its proposals for a Restructuring Plan to creditors on June 20th. 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 coming days.”

River Island’s future is set to be decided on Thursday.