When the tills fall silent: Navigating retail distress in 2025 

The challenges facing Britain’s high street have rarely felt so acute. In May 2025 alone, 2,238 companies in England and Wales entered insolvency – a 15% increase on the previous year and part of a sustained pattern of elevated failures. The retail sector, already navigating the shift to online shopping, felt that pressure sharply, with internet sales accounting for 27.8% of all purchases in June. Those two figures together tell a story of shops struggling to match old cost structures to a very different market.

For landlords, this wave of insolvencies presents a different kind of crisis: vacant units, restructured leases, and legal processes that can rapidly override long-established commercial agreements. As major high street names fall into administration or seek to reset their cost base, landlords must respond strategically, understanding not only the pressures retailers face but also the tools available to protect income, assets, and negotiating power.

When retail distress becomes critical, four legal mechanisms dominate the landscape: restructuring plans, Company Voluntary Arrangements (CVAs), administration, and liquidation. Each brings different consequences for landlords, from rent reductions and lease terminations to immediate repossession risks, and each demands a tailored tactical response. Recent examples illustrate the speed and complexity of these decisions: River Island secured High Court approval for a restructuring plan involving rent cuts and store closures; Claire’s  has moved into administration across the UK and Ireland; The Body Shop has undergone a partial pre-pack process; and Poundland has changed hands for a nominal sum as its new owners weigh up its portfolio. These cases share a common thread: the survival of the brand depends heavily on reshaping landlord relationships, often under pressure and at pace.

When duties change

For the directors of a struggling retailer, there comes a point where the focus must shift. The law requires them to promote the success of the company for the benefit of shareholders, but once insolvency becomes probable, that duty pivots towards protecting creditors. This “twilight zone” is a treacherous period. Continuing to trade without a credible path to recovery risks personal liability for wrongful trading under the Insolvency Act 1986. The choices made here will determine whether the business can be saved, sold, or must be wound up entirely.

In this compressed decision-making environment, the four legal pathways dominate. Restructuring, CVAs, administration and liquidation each offer different possibilities and pitfalls for retailers, landlords, lenders, and suppliers.

The landlord’s position

Across all insolvency processes, landlords are far from passive observers. A restructuring plan can force through rent changes over their objections; a CVA can categorise their lease for reduction or surrender; administration can strip a site from the tenant’s portfolio entirely; and liquidation will return the property, often in disrepair, with arrears outstanding.

Effective landlord response demands early analysis of the most likely insolvency option, known as the “relevant alternative,” coordinated action with other creditors, and, where appropriate, well-evidenced objections to ensure their position is not unfairly compromised. For those exposed to multiple tenant failures, forming or joining creditor committees can be a key way to influence outcomes and mitigate damage.

Landlords should also consider the wider risks: dilapidations, rates liabilities, insurance exposure, and time-to-relet all affect the real cost of retail failure. Forensic lease reviews, strategic rent deposit management, and negotiation of early break clauses or lease guarantees in any revised agreement are essential tools.

River Island and the restructuring plan

River Island’s court-sanctioned turnaround was delivered through a restructuring plan under Part 26A of the Companies Act 2006, introduced by the Corporate Insolvency and Governance Act 2020. This “super-scheme” allows a company in financial difficulty to present a binding proposal to creditors and members. Its most powerful feature is the cross-class cram down: with court approval, even dissenting creditor classes can be bound, so long as they would be no worse off than in the “relevant alternative” (often administration) and at least one in-the-money class supports the plan.

That power was first tested in the retail sector with Virgin Active, where landlords opposed rent changes but were bound nonetheless. In River Island’s case, the court accepted that without the plan the likely outcome was administration, meaning landlords in certain classes had no economic alternative. For the retailer, the plan delivered an immediate rent reset and a clear runway for new investment. For landlords, it offered a reduced but ongoing income stream rather than an empty unit.

Landlords facing a proposed restructuring plan must act quickly to assess whether they fall into an “out-of-the-money” class and evaluate the strength of their objections. Legal advice should focus on the economic alternatives and whether the plan unfairly undermines their interests. In some cases, negotiating early concessions or protective provisions within the plan can offer a more practical path than court challenge.

CVAs and the lease reset

Not every retailer needs, or can justify, the complexity of a restructuring plan. Where the core problem is a misalignment between lease obligations and trading conditions, the Company Voluntary Arrangement (CVA) remains a popular tool. Set out in Part I of the Insolvency Act 1986, a CVA is a binding compromise with unsecured creditors, supervised by an insolvency practitioner.

In retail, CVAs have often been used to group leases into categories, keeping the best stores on existing terms, reducing rents for marginal ones, and surrendering the rest. The High Court’s decision in Lazari v New Look [2021] confirmed that landlords can be treated differently within a CVA if that treatment supports a genuine rescue and all creditors in the same category are treated equally.

A notable example came in 2018, when Homebase used a CVA to close around 60 unprofitable stores, reduce rents on many others, and stabilise the business after a change in ownership. For landlords, the trade-off was reduced income in the short term but a better chance of retaining a tenant and avoiding long-term vacancy. For other unsecured creditors, the CVA delivered a return superior to what would have been achieved if the business had collapsed into administration or liquidation.

Where CVAs are proposed, landlords must weigh whether continued occupation on reduced terms offers more long-term value than vacant possession. In cases of multiple CVAs or perceived misuse of lease categories, collective resistance can make a difference. Early engagement and coordinated strategy are essential.

Administration in action

Sometimes the financial position is too precarious for a consensual restructure. Administration, as now seen with Claire’s UK and Ireland operations, offers an immediate moratorium on creditor action, giving an insolvency practitioner control with one of three statutory aims: rescuing the company as a going concern; achieving a better result for creditors than liquidation; or, failing those, realising assets for secured or preferential creditors.

Claire’s, which employs 2,150 staff across 278 UK and 28 Irish stores, is appointing administrators from Interpath Advisory after a steep drop in sales and growing competition. The move follows its U.S. bankruptcy earlier this month. Interpath has said it will assess all options, including a possible sale, to secure the brand’s future, and all stores will remain open during this process.

The procedure, set out in Schedule B1 to the Insolvency Act 1986, can be combined with a “pre-pack” sale, where a buyer is lined up before the administrator’s appointment to preserve goodwill and value. The Body Shop faced a similar process earlier in the year, with administrators closing unprofitable sites while exploring asset sales.

Landlords must be alert to lease disclaimers and the risk of non-payment during administration. This is often the moment to enforce forfeiture rights or re-enter possession before further value deteriorates. Unrecovered arrears, unrepaired premises, and rates liability falling back onto the landlord can quickly magnify losses.

When rescue is not possible

For some businesses, the only viable route is liquidation. If no buyer is found, a Creditors’ Voluntary Liquidation (CVL) could follow. In a CVL, directors resolve that the company cannot continue trading, appoint a liquidator, and oversee the orderly sale of assets, with proceeds distributed according to the statutory priority.

Liquidation rarely saves jobs or preserves brand value, but it can prevent further losses, enable directors to comply with their duties, and give creditors a definitive closure. The Insolvency Service’s statistics show CVLs remain the most common insolvency procedure, particularly for single-site or heavily loss-making operations.

For landlords, liquidation means regaining control of the unit, but often in poor condition and with months of unpaid rent. Early asset preservation measures, clear lease termination procedures, and preparation for reletting become urgent priorities.

Choosing the right path

The decision between these pathways depends on viability, stakeholder support, and timing. Retailers with strong fundamentals but a bloated lease profile may find a CVA or restructuring plan delivers the reset they need. Those facing imminent cash exhaustion may have no choice but to enter administration to protect what value remains. And where the numbers simply do not add up, liquidation provides finality.

For landlords, lenders, and investors, understanding the differences and their practical impact is essential to protecting value and negotiating effectively. With every new retail insolvency, the response window narrows.

Guiding clients through difficult decisions

At Newmanor Law, we help commercial landlords take swift, strategic action when tenants falter. From assessing legal exposure to shaping restructuring outcomes, our early-stage advice helps protect income, preserve value, and reassert control. In a volatile retail environment, legal clarity is not just helpful, it’s essential.

The high street may be changing fast, but the need for timely, informed decisions remains constant. With the right guidance, even the most difficult retail challenges can be managed in a way that protects value, and sometimes, saves the business entirely.