Retail restructuring - From pressure to opportunity

The UK retail sector continues to experience a period of sustained pressure, with insolvency and restructuring activity prominent throughout 2025/2026. However, this is not quite a story of decline, rather, it presents opportunities for well advised businesses to emerge stronger, more focused and better aligned to modern consumer behaviour.

Under pressure - Not in crisis

Recent Insolvency Service data shows a steady rise in formal corporate insolvency processes. Company administrations in early 2026 remained above levels seen in the H2 of 2025.

Retail and wholesale businesses remain among the hardest hit sectors, reflecting rising labour and energy costs, higher National Insurance contributions and continued pressure on consumer spending. Consumer habits have also shifted towards online, value-led and experience-based spending, leaving many traditional high street models exposed.

Even so, the current environment suggests sustained pressure rather than crisis. Many retailers remain fundamentally viable and, with the right intervention, can be restructured or repositioned successfully.

High street restructuring

Over 2025 and 2026, administrations, CVAs and restructuring plans have continued to help retailers address legacy liabilities, streamline portfolios and refocus on stronger-performing channels. While these processes can be demanding in the short term, they have provided a practical route for viable businesses to exit loss-making sites, renegotiate leases and preserve value, often through pre-pack sales that support continuity and jobs.

High-profile examples include Radley’s acquisition out of administration, as well as distress affecting other retail brands such as Quiz Clothing and Claire’s, where store closures and insolvency processes have been widely reported. At the same time, CVAs continue to be used selectively.

While less common than in previous retail cycles, recent hospitality sector examples include Franco Manca and Leon’s exit from administration through a CVA. In the right circumstances, CVAs remain a valuable tool where relative speed is required and lease restructuring is central to a sustainable future.

Restructuring plans have become an increasingly important tool for retailers, offering a flexible way to reshape balance sheets and store estates for long-term viability. Recent activity, including Poundland’s sanctioned plan and River Island’s use of the process to realign its physical estate, highlights how these plans can support lease restructuring, debt compromise and wider operational change. The broader trend is one of earlier and more strategic intervention. Restructuring plans are becoming a mainstream option for preserving value and creating a more sustainable platform for growth.

While administrations and CVAs remain important in the right circumstances, the retail sector is increasingly turning to more holistic solutions as businesses adapt to a changing trading environment.

Early engagement and proactive restructuring

Creditor behaviour is also continuing to evolve. Some lenders appear to be supportive, others, particularly HMRC, are taking a firmer approach to enforcement. Consequently, we have seen a noticeable increase in directors seeking advice sooner, which reflects a growing awareness of directors’ duties and the value of taking action early, when a broader range of options remains available.

In response to this growing need, Freeths has developed a dedicated online resource for directors facing financial pressure. For more see information, see Directors in Financial Distress.

From a legal perspective, early engagement significantly increases the range of available options, from informal workouts, refinancing and CVAs, through to formal restructuring plans. It also enhances the prospects of preserving enterprise value and achieving a better outcome for stakeholders as a whole.

Key takeaways for retailers

For retailers, the current environment remains challenging, but it also presents an opportunity to adapt and strengthen. Businesses that engage early, take informed decisions and make effective use of the restructuring tools available are often best placed to protect value and build a sustainable platform for the future.

In practical terms, that means maintaining close oversight of cash flow, engaging proactively with key stakeholders and seeking advice at an early stage where financial pressure begins to emerge. It may also require decisive strategic choices in relation to store portfolios, operating models or capital structure.

In our experience, retailers that view restructuring as a strategic tool rather than a last resort are more likely to emerge more focused, resilient and better positioned for long-term success.

For more information, please get in touch with our Restructuring & Insolvency team.