How is the retail sector utilising Restructuring Plans: Is the criticism abating?

Following the High Court sanction of the River Island Restructuring Plan (RP) and the recent outcome of the Poundland RP, the use of RPs shows no sign of slowing down.  In this article we explore what RPs are, the outcome for River Island, what is on the horizon for Poundland and who might be next.

What is a Restructuring Plan?

An RP is a formal arrangement between a company, its creditors and its shareholders, which was introduced in 2020.  An RP must involve an injection of funds from shareholders and/or lenders, or a deferral of the repayment of existing obligations (which is the differentiator from other insolvency processes such as administration).  

Creditors are split into classes (aligned to their respective rights), creditors vote on the RP, and 75% of each class need to vote in favour of the RP for it to be approved.  Alternatively, the Court can force dissenting creditors to accept a proposal by way of ‘cramming down’ a class of creditors, if the Court considers they will be ‘no worse off’ than in the relevant alternative (often determined to be administration).

RPs have been proposed by The Body Shop, Ted Baker, Superdry, River Island and Poundland (amongst others). Many more have been and are being proposed in the food and drink sector, including dim-t, Wildwood, Prezzo, and Pizza Hut, all of which are impacting high streets across the country, thereby impacting the retail sector on the shopping proposition in towns and cities nationwide. 

Hope was on the horizon for landlords and creditors

In August 2025, River Island had its RP sanctioned by the High Court, which included a financial and leasehold estate restructuring. 

River Island, in its documentation, cited rising operational costs, a shift to online sales and rising competition for its struggles. As outlined in the RP, there were a number of classes of creditors. 

The retailer failed to reach the required 75% approval in every individual creditor class and sought, and was granted the assistance of the Court to cram down creditors, predominately landlords. The RP was sanctioned, which resulted in the closure of 33 stores and reducing rents at 71 locations, which will assist in reducing the physical footprint and associated costs, but that alone will not ensure that the business remains sustainable. That will come down to the core proposition. 

Under the Virgin Active RP, there was significant criticism from landlords about the proposed profit-sharing arrangements. Shareholders would benefit from significant returns, whereas the landlords were offered just enough to satisfy the ‘no worse off’ test. Statements made by the landlords in Virgin Active included the following:

• “The whole purpose of the Restructuring and of the Plans was to extract value from unsecured creditors, and to deny landlords any negotiating leverage, ultimately for the benefit of shareholders who stand to retain their equity and benefit from any future upside of the Plan Companies once they are restored to financial health.”
• The KC acting for the landlords characterised the position of the landlords, who he said had been excluded from the negotiations in colourful terms: “if you are not sitting at the table, that is because you are lunch.”

Following the Virgin Active RP, and the commentary from the Judge on that case and others, there have been detailed discussions around a fairer distribution of returns to be paid to all creditors, as opposed to lenders and shareholders taking the lions share. 

Landlords and other minority creditors had hoped that the position and power of unsecured creditors would improve, but recent cases show nothing has changed, and the Court continues to cram down classes that are ‘no worse off’. 

A number of creditors argue that while they may, in an RP, be no worse off when compared to an administration (by a couple of pence in the pound), in an RP the lenders and shareholders are considerably better off, and if the RP is successful, significant profits will ultimately be returned to the shareholders.

Unsecured creditors are crying out for the returns proposed in an RP to be more equitable, however recent RPs have not adopted a more equitable approach and it seems retailers do have the upper hand in dictating proposals and returns to unsecured creditors.

What does the future hold for Restructuring Plans?

It appears much of the same. Poundland’s RP has in recent days been considered by the Court. While following the well-trodden path of RPs to date, unsurprisingly the Poundland RP has been approved by the Court.

Retailers need to analyse which creditors are critical to survival and offer enhanced terms, but for those creditors, in particular for stores the retailer wants to exit, an RP can very effectively remove those obligations with minimal payments being made. This can assist with the restructuring of leasehold obligations and securing a footprint that is financially viable.  

Furthermore, the Court appears willing to cram down landlords when they do not vote in favour, which differentiates RPs from Company Voluntary Arrangements (CVAs), where you have to obtain 75% of each class voting in favour. In this circumstance, there is no principle for the Court to override the decision of creditors by way of the ‘cram down’ principle, which used to be the go-to tool for retailers.   

Who is next?

Claire’s Accessories has in recent weeks entered administration, and its US arm has filed for bankruptcy. We would expect the administrators to exit underperforming stores through an administration, but an RP had been on the cards for over a year.  

Currys is another one to watch. The retailer has committed to reducing its central costs in the UK by 10%, however it is yet to be seen if redundancies alone will achieve that target, or whether a reduction in stores is also required.

Conclusion

There are significant changes facing the retail sector, from supply chain issues, increase in National Insurance contributions, security breaches putting customer data at risk, inflation on the rise and reduced profitability in stores. A retailer has very little control over most of these challenges and as the saying goes, if you do the same things, expect the same results.  

The retail sector has weathered a number of storms, but retailers need to adapt. For some, that will be pivoting to a more stable target audience, adapting to how they engage with customers and selling online.

For others, there needs to be a significant change to how they operate, which may include a reduction in the stores they operate from. For each of the RPs where we have advised our clients, all have been successful in cutting that bottom line, and with the Courts' support, we don’t see that changing anytime soon.