Just when landlords of retail and food and beverage units across the country were beginning to relax, there has been a spate of restructurings and Company Voluntary Arrangements enforcing swingeing rent concessions and closures.
In retail, restructurings backed at the High Court in the past year have included those for Poundland, Poundstretcher, The Original Factory Shop, Claire's, Hobbycraft. In the food and beverage arena there have been similar processes for Las Iguanas, the Real Greek and Franco Manca.
The number of companies – and the fact that many are high street staples – is causing concern, as there had been a relatively long period where such moves have been rare.
Retailers and F&B companies were trading much more strongly as consumers returned to shopping centres and high streets following lockdowns. In addition, rents have rebased across the country to more affordable levels for tenants, particularly when business rates relief programmes were added in. All of which has led many market commentators to believe that most of the retailers that really needed to restructure or move online had done so.
What has prompted the latest spate? Are these badly-run businesses finally coming to the end of the road, or good businesses being pushed over the edge by a tough macroeconomic environment and government policies?
TGJones test case looms
CVAs are legally binding agreements with a company's creditors to allow a proportion of its debts to be paid back over time and need 75% of the creditors, by value, to support the proposal. This can result in rent reductions or major store closures. The strongest argument that retailers need to be right-sized and rents reduced at under-performing stores is that otherwise they would not be able to ward off insolvency and survive. Better a better-run, smaller business than no business at all, goes the thinking.
Landlords say CVAs disproportionately hit them through rent reductions, writing off arrears and site closures. Heightening this, replacement tenants were not simply waiting to step in during the pandemic.
It was no surprise that CVAs were used heavily by businesses during the pandemic, particularly in retail, consumer, hospitality and leisure, as they were all affected by reductions in trade. And it is also unsurprising that there have been fewer CVAs as the market recovered – until now.
Modella Capital, the company most involved in the recent increase in restructurings, in previous statements, has said it is "absolutely committed to bricks and mortar retail, at a time when the sector is coming under increasing pressure".
It has added: "Where necessary, Modella Capital has the skills and experience to restructure retailers that require it, in order to ensure they create profitable, ongoing businesses that will continue to serve communities and employ thousands of people across the UK."
Most under the spotlight has been its restructuring proposals for TGJones. 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%.
This week Modella announced an improved plan that reportedly proposes 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 £47.5m.
Modella has also promised a store rejuvenation programme.
The swingeing nature of the original terms has 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. The deal goes before a High Court judge for approval on 29 June and is likely to prove a test case.
A British Land spokesperson said: “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 has warned creditors that TG Jones 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 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.”
In the past TGJones has said the plan has been developed with independent, expert advice and is designed to be fair to all stakeholders.
It has argued: "Independent analysis confirms that the terms of the Plan leave landlords no worse off than the alternative. Modella Capital is making more than £35 million of financial contributions to support this restructuring. Any suggestion that the Plan amounts to a transfer of value to the shareholder at landlords' expense is completely incorrect.
"First-year rental savings will be reinvested directly into the store estate, which requires significant investment following a period of chronic underinvestment under TGJones’s former owner. The forced name change and its attendant impact on sales has made trading yet more difficult. This investment is essential to drive footfall and revenue for the benefit of all stakeholders, including landlords.
"The Restructuring Plan is vital to the survival of this 234-year-old business, along with the preservation of thousands of jobs. We remain open to constructive engagement with all creditors and urge them to consider the Plan on its merits."
Two other high street retailers under Modella's ownership – Claire’s and The Original Factory Shop – collapsed at the start of this year with the loss of about 2,500 jobs.
Stephen Springham, head of UK Retail Insight at Knight Frank, thinks the latest spate of restructurings are being driven by overly-aggressive strategies from private equity owners alongside some unhelpful additional cost pressures, for instance the rise in the national minimum wage.
"This is unequivocally neither a macro-economic nor a consumer-driven thing. If people look at the actual numbers rather than just repeat the narrative, consumer confidence is actually fairly stable. If you look at retail sales performance it has been really strong year-to-date – in the first quarter, they were up 5% overall or up 3% in real terms. I have seen worse boom times than this, so consumer demand is fine, and any occupier distress is not related to the consumer or wider bread and butter of the market."
Springham points the finger, to a large extent, at the private equity model and most specifically Modella.
"If you look at TGJones, stationery and books, the main part of the business, grew by 23% last year and was the best performing retail category in terms of value. So it is a bit of a nonsense to blame the market."
But Springham does believe there is a split between what is happening to F&B businesses and to the retailers. "There is a bit of distress in food and beverage which is often private equity owned. The minimum wage going up in April did not help and the businesses are some times a bit flakier and exposed to just a little movement in such things. We may see a bit more distress on the leisure and F&B side, particularly as some of the good brands have overexpanded. But it is not a house of cards. On the retail side you can point the finger at the likes of Modella. The retailers there are not necessarily experiencing pain directly as much as having pain inflicted upon them."
Springham points in particular to the CVA for Hobbycraft which he describes as a fundamentally good business. "Modella has just bought Flying Tiger [the Danish novelty retailer] but is not willing to put money into salvaging TG Jones. I think Claire's was a tired business but it could have survived."
He advises that in the current environment, private equity owners need to be mindful of the strength of demand for retail park stores.
"Hobbycraft really should not have ended up as a CVA. I think landlords are thinking, if we have a retailer proposing a rent free period or a haircut, we should just get another operator in. In certain locations, some landlords are over a barrel with TG Jones, for instance, but with a retailer like Hobbycraft there are record low vacancy rates on retail parks, so landlords may well be happy to get that space back."
Demanding three-year rent holidays and rent cuts of up to 75% is possibly the most extreme proposition the market has encountered to date; fundamentally challenging the equity of a commercial lease agreement
A C-suite executive at a REIT landlord, who declined to be named, agreed that there was a difference between what was happening with retail restructurings, where it was specific and isolated, and what is happening in food and beverage.
"There is a trend away from slightly higher-end sit-down F&B to more grab-and-go and health-conscious, and to higher numbers of meals. The Ozempic effect is having an impact too on this."
Jonathan de Mello, founder and chief executive at JDM Retail, says the decision on the restructuring of TGJones will be pivotal.
"The precedent set by previous restructuring rulings has increasingly exposed property owners to a disproportionate financial burden. Restructuring plans themselves are a legitimate mechanism to rescue struggling businesses, and the restructuring companies advising on them are simply utilising the legal framework currently available to them. However, what we are seeing from Modella Capital regarding the TGJones estate pushes that framework to its absolute limit. Demanding three-year rent holidays and rent cuts of up to 75% is possibly the most extreme proposition the market has encountered to date; fundamentally challenging the equity of a commercial lease agreement.
"Modella’s broader track record on the high street to date explains why there is so much scepticism surrounding this turnaround plan. Claire's and The Original Factory Shop were both acquired by Modella – only to collapse into full administration earlier this year. Meanwhile, severe CVAs and store closures were quickly pushed through at Hobbycraft and Wynsors within months of Modella taking control. It is difficult not to conclude that Modella might have entered these acquisitions under the assumption that the High Court would readily facilitate aggressive cross-class cramdowns to bail out their investments.
"Ultimately, the future prognosis for TGJones might be highly problematic regardless of what happens in court, as the business could fail anyway and close all its stores irrespective of what landlords agree to here. This outcome might have been entirely inevitable all along, and it is highly likely that Modella knew that was the case when they took it on. This track record is exactly why institutional property players like British Land and Landsec are entirely right to mount a formal legal challenge at the High Court sanction hearing."
Alan Spencer, head of UK retail at Savills, says the recent increase in CVAs is largely concentrated among retailers that were already under pressure, many of which have previously undergone some form of restructuring.
"This isn’t a broad-based resurgence of distress across the sector, but rather a continuation of challenges for a specific cohort of operators. Seasonality is also a factor. We typically see an increase in restructuring activity in the first part of the year, following the Christmas trading period, when businesses reassess performance and cost bases."
Spencer adds the current macro environment is clearly adding to the pressure.
"While trading performance has been relatively steady in many parts of the market, operating costs continue to rise – from fit-out and store investment to wider inflationary pressures – which is forcing retailers to revisit their portfolios. One positive is the growing flexibility in leasing structures. The shift towards more dynamic rent review mechanisms, including both upward and downward adjustments, should help reduce the risk of retailers becoming trapped in over-rented space and may limit the severity of future restructurings."
Modella was contacted for comment.
Restructurings on the rise
Poundstretcher In June 2026, US private equity group Fortress secured approval for its restructuring plans for Poundland's bargain basement peer Poundstretcher.
The turnaround proposals see all of Poundstretcher's 298-store network continue to trade and all staff retained. But there will be huge rent cuts with Poundstretcher cutting rents by at least 25% on roughly 50 stores and not paying rent at another 50 underperforming locations.
The five-point plan also amends the first ranking asset-based lending facility and second ranking shareholder loan agreement (advanced by shareholder funds managed by affiliates of Fortress Investment Group) to extend the maturity date of the shareholder loan agreement from 2026 to 2029. Poundstretcher is also able to access a further £4.5 million of funding from the shareholder loan agreement.
Hobbycraft Modella Capital's company voluntary arrangement for Hobbycraft involved closing up to a quarter of the stores of the arts and crafts chain. The plans were backed in May last year and exited this month.The proposals originally would see nine of the group's shops closed, with the loss of roughly 100 jobs, with 18 more remaining open if agreement with landlords over rent cuts was reached. Following a strategic review Hobbycraft ultimately closed 18 stores as part of its rationalisation.
At the time Hobbycraft CEO Alex Wilson said the closures would help secure the future of at least 99 stores and 1,800 jobs, describing closures as "always a last resort". Modella bought Hobbycraft from the private equity firm Bridgepoint in 2024.
Claire's In April 2026, Claire's, the tweenager jewellery and accessories retailer, closed all 154 of its standalone stores in the UK and Ireland.
Administrators Kroll said more than 1,300 staff had been "notified of redundancy", though its 356 concessions, many of which are in Asda supermarkets, would remain open as well as its head office.
This came after Claire's owner Modella Capital said in January that it had placed the company into administration due to low Christmas trading. Modella itself had bought the retailer out of administration in August 2025. Around 145 branches it did not buy were closed by administrators in November.
Russell & Bromley Following a prepack administration in January, the shoe retailer had closed all of its remaining 33 standalone stores and nine concessions across the UK by April. Next bought the brand with three prime stores in Chelsea, Mayfair and Bluewater retained.
The Original Factory Shop In January 2026, fashion chain the Original Factory Shop, with 137 stores and 1,220 staff, was placed into administration. The company had been bought by Modella Capital in February 2025.
All stores were closed in April 2026 after a buyer failed to materialise. The collapse followed the failure of Modella's attempted CVA for the business launched in February 2026 and seeking major rent concessions.
Modella said tough trading conditions and "alarming" low Christmas trading had hit the business.
River Island In August 2025 the High Court backed fashion retailer River Island's restructuring plans.
The plans allowed the family-owned company to implement rent-free measures at 24 shops, as well as discounted rents at a number of other locations. In total the plan includes reduced rents across 71 stores, while the retailer had announced in the June 2024 that it wanted to close 33 stores across the UK from its 230 locations.
Poundland A restructuring plan for bargain retailer Poundland was approved at the High Court in August 2025. That saw Poundland stop paying rent at hundreds of its circa 800 stores as part of new owner Gordon Brothers' proposals. The prior June, Warsaw-listed firm Pepco sold its shares for a "nominal consideration", widely reported as around £1. As part of the transaction, Gordon Brothers, Pepco Group and Poundland said they had agreed to put forward a restructuring plan.
The company subsequently announced plans to shut 68 stores, which would affect around 1,000 staff. Poundland also said it would close its distribution hub at Darton, South Yorkshire, later this year and another warehouse at Springvale in Bilston, West Midlands, early next year.
Las Iguanas A restructuring plan for Las Iguanas restaurants was approved by a High Court judge this month. Iguanas Holdings Limited runs 44 restaurants across the UK but argued it would “inevitably enter administration” if the restructure was not approved. The plans involve significant rent reductions.
Franco Manca In May pizza group Franco Manca's Company Voluntary Arrangement was approved by creditors in a move that saw it close 16 of its restaurants, affecting 225 jobs.
Parent company The Fulham Shore said it had received backing from over 90% of voting creditors.
The Real Greek In May the Real Greek restaurant chain was sold via a pre-packaged administration in a major restructuring. The sale to Karali Group, the owner of Cote Brasserie, saw 19 of the Mediterranean restaurant business's 28 outlets retained.