Restructuring proposals for TGJones, the former WH Smith high street retail business, have been approved at the High Court in a decision that has become a test case for the recent increase in such processes.
Judge Robert Hildyard on Wednesday approved the plan, which will see up to 150 stores close as well as swingeing rent cuts. The proposals include a £15 million cash injection by Modella Capital, the private-equity company that bought the retailer around a year ago from WH Smith, the household name stationery business.
The deal, which was improved at the last minute after amendments following demands from landlords including British Land and NewRiver, will see the owners of many of TG Jones' 451 stores receive no rent at all for years. Around 150 landlords are expected to terminate their contracts altogether, according to the business plan submitted to court.
Modella bought the former WH Smith high-street business and its 480 stores in May 2025, rebranding it TGJones. At the termination of a 12-month moratorium on closures agreed as part of the acquisition, it launched a restructuring plan proposing to shut up to 150 stores, pay landlords of more than 120 stores no rent for a three-year period, and cut rents on hundreds of other stores by between 15% and 75%.
The terms sparked an alliance of major landlords including Landsec, British Land, M&G and NewRiver REIT to mount a legal challenge fighting the proposals at the High Court.
Last week Modella announced an improved plan that proposed sharing 50% of any “upside” after a three-year period, if TGJones’ combined annual turnover gets to £40 million during that time. The previous terms offered 25% cut of any upside at a threshold of £47.5 million.
Modella has also promised a store rejuvenation programme. British Land and other landlords withdrew their objections.
Last week before reaching that agreement a British Land spokesperson had told CoStar News: “British Land continues to believe that the scale and structure of Modella’s restructuring plan for TGJones are unacceptable. We acknowledge the changes that have already been made to the plan in response to our concerns, but they do not go nearly far enough.
"The principle remains the same: As a creditor, with our business and shareholders’ interests in mind, we will not support proposals we consider fundamentally unfair, with deep rent cuts – even on profitable stores at fair market rents – placing the lion’s share of the restructuring burden on to property owners, and zero equity from the shareholders who stand to benefit.”
Arguing for its restructuring plans, Modella had warned creditors that TGJones may run out of money if they are not approved, after sales fell 12% between September and March. It has attributed this to “weak consumer spending”.
Modella is a UK firm set up by restructuring professionals four years ago, and it has quickly taken control over a number of well-known retailers with around 900 shops and 10,000 staff.
A TGJones spokesperson last week said it has been working with landlords and listening to their concerns: "We are aware of suggestions made by a small number of landlords in connection with the restructuring plan. We have engaged constructively with these landlords, as we have with other creditors across the estate.
"As a result of that engagement, we have improved the terms of the Plan to reflect feedback received. We believe these improvements demonstrate our commitment to achieving a satisfactory outcome for all stakeholders.”
Responding today's approval, Alex Willson, CEO of TG Jones, said: “We welcome the court’s approval of our Restructuring Plan. 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. We are incredibly grateful to all the colleagues, partners and stakeholders who engaged constructively throughout the process, and to Modella Capital for its continued financial commitment.”
Ion Fletcher, director of policy, Real Estate:UK, said: “We support a corporate rescue culture, but restructuring plans can be used to force through changes that go further than is needed to save the business, thereby transferring value from property owners to the shareholders of proposing businesses.
“This case highlights how it is possible to make restructuring plans fairer when proposers and creditors talk to each other – it’s a shame that it took a formal objection in court to force that conversation, which should have happened ahead of the plan being launched. We need new guidance to better promote proper engagement with landlords and other creditor groups and ensure those that bear the cost of a restructuring get a meaningful share in any upside if and when the business returns to profitability.”
CoStar News published a recent review of the rise in Company Voluntary Arrangements, restructurings and "cross-class cramdowns".
