River Island averts collapse after defeating Mike Ashley in rent cut battle
The retail giant successfully overcame resistance from landlords to force through rent cuts during a hearing on Friday, as a High Court judge ruled that radical action was needed to help the business survive.
As well as Frasers, property giant Landsec had also opposed the restructuring plan owing to its ownership of affected stores.
In his ruling, Mr Justice Norris accepted that the turnaround plan was necessary to 'bridge a funding gap'.
It came as River Island revealed during the court hearing that it plans to cut 110 head office jobs this month to save £8.1m in costs.
The court approval means the fashion retailer has gained a crucial lifeline, allowing it to unlock a loan from its founders, the billionaire Lewis family, to avoid collapsing into administration.
It had warned that without a radical turnaround to write off store rents and debts, it would essentially run out of money by September, as previously revealed by The Telegraph.
However, the proposal was opposed largely by landlords because it involves sweeping rent cuts for parts of its 230-store estate.
The plan also affects local councils across the country, with River Island able to walk away from millions of pounds owed in business rates.
River Island had gained the support of around 80pc of its creditors by value following a vote last Friday.
However, final approval for its rescue plan rested with the High Court because only half of all creditor classes backed the plan.
Support was required from at least three-quarters of each class in order for the court to wave through the proposal.
Its creditors were grouped into 10 categories, including landlords and councils. As well as Frasers and Landsec, affected store owners include British Land, the Crown Estate and Legal & General.
'Strong platform'
Following Friday's decision, Ben Lewis, chief executive of River Island, said: 'We are pleased that River Island's restructuring plan has been approved by the High Court.
'We have a clear transformation strategy to ensure the long-term viability of the business, and this decision gives us a strong platform to deliver this.
'Recent improvements in our fashion offer and shopping experience are starting to show results, and the restructuring plan will enable us to align our store estate to our customers' needs.
'We are grateful to our suppliers, landlords and other stakeholders for their constructive engagement and shared confidence in River Island's future.'
As one of Britain's best-known fashion chains, River Island was founded by Bernard Lewis, 99, and his brother David in 1948. Their first shop was in Hackney, East London.
The family fortune is estimated at £2.7bn, with a property portfolio that includes a luxury hotel in Palm Beach, Florida.
Bernard's nephew Ben rejoined the business as chief executive earlier this year, having started as a store manager in 1990 before leading the business from 2010 to 2019.
The Lewis family had agreed a fresh £40m borrowing facility through their investment company, Blue Coast Capital, provided that its turnaround plan goes ahead. Blue Coast is its biggest lender, with debts totalling £270m.
The restructuring comes after a raft of shop closures at other high street retailers, including at Original Factory Shop and Hobbycraft. Landlords are also steeling themselves for scores of Poundland store closures in the coming weeks.
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