River Island Holdings Limited, Re

A restructuring plan may be sanctioned despite dissenting creditor classes where the statutory cram-down conditions are satisfied and the plan represents a fair allocation of the restructuring burden and benefits.

The court should examine the relevant alternative, normally an insolvency process, as the starting point. Pari passu treatment within insolvency classes is the initial expectation, but differential treatment may be justified. The court focuses primarily on creditors’ interests, while also considering the plan’s wider effects, the source of preserved or generated value, and substance rather than form. New money supplied on unusually favourable terms may itself be a benefit to the funder rather than a contribution to the plan.

River Island Holdings Limited applied for sanction of a restructuring plan under Part 26A of the Companies Act 2006. The company and its group faced an immediate liquidity shortfall and proposed operational restructuring, lease compromises, creditor payments and new funding.

At the convening stage, Thompsell J held that the plan was an arrangement for the purposes of section 901A and that the company had encountered relevant financial difficulties: [2025] EWHC 2047 (Ch). Ten creditor classes voted on the plan. Several classes assented, while others dissented. The central issues at sanction were the relevant alternative, satisfaction of the statutory cram-down conditions, and whether the court should exercise its discretion to impose the plan on dissenting classes.

1. Plan sanctioned. The restructuring plan was approved notwithstanding the dissenting classes.
2. The relevant alternative was a group-wide administration followed by a sale of stock, brand and intellectual property. The court scrutinised, rather than simply accepted, the company’s evidence concerning that alternative and found it supported by the liquidity position, expert evidence and the absence of leasehold premium value.
3. The assenting classes were entitled to substantial weight because they were likely to be the best judges of their commercial interests. The rationality test was satisfied because an intelligent and honest class member could reasonably approve the plan having regard to class interests.
4. The threshold conditions in sections 901G(3) and 901G(5) were satisfied. No dissenting creditor would be worse off than in the relevant alternative, and at least one assenting class had a genuine economic interest in that alternative. The court also scrutinised the possibility of an artificial class and found none.
5. In exercising the cram-down discretion, the court applied the following principles: the restructuring burden and benefits must be fairly shared; the plan company bears the persuasive burden even without objectors; treatment in the relevant alternative is the starting point; pari passu treatment is the initial expectation in an insolvency class; differential treatment may be justified; creditor interests are the primary focus; the court may consider effects on non-compromised stakeholders and the source of benefits; and substance prevails over form.
6. The differential treatment of landlords was justified by the carefully applied methodology assessing profitability, strategic importance and contribution to the transformed business. The plan was a genuine attempt to bridge the funding gap and achieve operational restructuring, rather than an arbitrary compromise designed to extract advantage.

The judgment itself records an earlier convening decision in the same proceedings:

• High Court (Insolvency and Companies List): Thompsell J ordered the convening of plan meetings and held that the plan was an arrangement under section 901A of the Companies Act 2006: [2025] EWHC 2047 (Ch).
• High Court (Insolvency and Companies List): Sir Alastair Norris sanctioned the restructuring plan.