**Up to 150 Ex-WHSmith High Street Stores to Close Following Restructuring Approval**
The owner of TG Jones, the rebranded former High Street business of WH Smith, has secured approval for a significant restructuring plan that will result in the closure of up to 150 stores across the UK. This decision comes as part of a broader strategy to address financial difficulties and adapt to challenging retail conditions.
Modella Capital, which acquired the WH Smith High Street stores last year and rebranded them as TG Jones, currently operates 451 stores employing approximately 4,700 workers. However, the company has faced severe financial challenges, leading to the need for drastic measures. The High Court was informed that TG Jones was on the verge of insolvency, with a projected cash shortfall of nearly £8 million by the end of the week unless the restructuring plan was approved.
Tom Smith KC, representing TG Jones, described the business as "highly distressed" and indicated that without a £10 million loan from Modella and a deferral of liabilities, including a significant tax bill from HMRC, the company would have run out of funds by April.
The restructuring plan includes not only the closure of stores but also substantial rent reductions for the remaining locations. Approximately 120 landlords will not receive rent for up to three years, while hundreds of other stores will see rent cuts ranging from 15% to 75%. Modella Capital has stated that these measures are essential for the survival of the business and that some of the savings will be reinvested into the stores to support a turnaround strategy.
Despite the critical nature of the restructuring, the plan faced opposition from various stakeholders, particularly from property owner British Land, which labeled the proposals as "fundamentally unfair." However, Modella Capital made several concessions that ultimately led British Land to withdraw its opposition.
The court's approval of the restructuring plan was granted by Mr. Justice Hildyard, who assessed whether the plan was fair and whether creditors would be better off under this arrangement compared to the company entering administration. The judge's decision allows TG Jones to move forward with its strategy, which aims to preserve a significant portion of its store estate and create a more sustainable business model.
Alex Willson, the chief executive of TG Jones, expressed gratitude for the court's decision, stating, "This decision allows us to move ahead with our turnaround strategy. The plan protects the substantial core of the store estate and makes TG Jones a stronger, more sustainable business."
As the company navigates this challenging period, the future of the remaining stores will depend on how many landlords choose to accept the revised rent agreements. The restructuring plan anticipates that TG Jones will ultimately operate around 302 stores, contingent on the decisions made by landlords regarding their leases.
The situation highlights the ongoing struggles faced by retailers in the current economic climate, particularly those with a significant presence on the High Street. With changing consumer habits and increased competition from online retailers, many traditional brick-and-mortar stores are reevaluating their business models to remain viable in a rapidly evolving market.