The London-based company is currently seeking approval for a radical restructuring plan
One of the UK’s biggest fashion retailers is at risk of collapsing into administration due to a heavy pile of debt.
River Island is desperately seeking approval for a radical restructuring plan in a last-ditch bit to continue operating, according to documents shared with creditors.
The high-street clothing chain also needs to secure further funding later this year in order to preserve its future.
The company, which was founded in London in 1948, has laid out a major rescue plan which will see it shut 33 stores and pay reduced rents on a further 71 shops.
In a bid to stem losses, landlords are being asked to cut rents for three years and potentially stop payments completely on some sites.
The proposal will need court approval next month in order for the business to be saved.
The Telegraph reports that the company will be “unable to pay its debts” by the end of the month if the plan is rejected.
If that turns out to be the case, the company will “be subject to administration or other insolvency proceedings”.
At a hearing on August 7, River Island will need to show that it has the backing of 75% of the group’s creditors – most of whom are landlords.
The company has said talks with these creditors have been positive and it expects to gain approval.
A River Island spokeswoman 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.”
River Island currently employs around 5,500 people across the UK & Ireland.