What Is a Restructuring Plan? River Island’s Rescue Explained
This month, River Island made headlines after the High Court approved a rescue plan that will save more than 4,000 jobs. The plan will see the closure of 33 underperforming stores, a reduction in rent across some locations, and changes to how the business operates — all designed to give the company a fighting chance in today’s tough retail environment.
But the process River Island used — known as a Restructuring Plan — is something many people may not have heard of before. Here’s what it means, why it matters, and how it’s already being used to save well-known names on our high streets.
What Is a Restructuring Plan?
A Restructuring Plan is a legal process. It allows a struggling but potentially viable business to agree changes with its creditors (people or companies it owes money to) in order to survive.
It’s approved by the court and can include things like:
- Reducing debt
- Changing payment terms
- Cutting rent
- Selling parts of the business
The most important feature? The court can approve the plan even if some creditors vote against it — as long as it’s shown to be better than the business collapsing.
Why Is It Different From Other Rescue Options?
Before 2020, businesses often used processes like Company Voluntary Arrangements (CVAs) or informal deals with creditors. But these relied on getting most creditors to agree.
The Restructuring Plan changes the game because the court can overrule dissenting groups — known as “cross-class cram-down” — making it harder for a small group to block a deal that could save the business.
River Island’s Story
River Island’s plan faced resistance from some landlords, unhappy with reduced rent and store closures. But the court decided the plan was still a better outcome than insolvency, where landlords might have received even less money — and thousands of people would have lost their jobs.
The approval means River Island can now restructure its business, focus on profitable locations, and keep trading.
Other Examples
River Island isn’t the first to use this tool. Other companies include:
- Virgin Atlantic – to restructure debts during the pandemic.
- Prezzo – to save restaurants during tough trading conditions.
- Houst – a smaller business that used the process to keep going despite HMRC opposition.
The Pros and Cons
Pros
- Can save jobs and keep well-known brands alive
- Court involvement adds legal certainty
- Stops small groups of creditors from blocking a viable plan
Cons
- Expensive and complex — often used by bigger companies
- Public process — financial troubles are aired in court
- Still relatively new, so legal outcomes can be unpredictable
Why It Matters
For the public, this is about more than just legal terms. It’s about jobs, communities, and keeping the high street alive.
When used well, a Restructuring Plan can mean the difference between seeing a favourite shop close for good, and giving it a second chance to adapt.
If you run a business facing financial pressure, it’s worth knowing there are legal tools — including Restructuring Plans — that might help. Speaking to a qualified insolvency or restructuring adviser early can open up more options before it’s too late.
Bottom line: River Island’s rescue shows that even when not everyone agrees, the law now gives companies a way to survive — and sometimes, that’s what it takes to keep the lights on.