TG Jones, the owner of the former WH Smith high street business, is set to seek court approval next week for a stringent restructuring plan that could lead to the closure of up to 150 stores. The plan has received backing from major landlords, the Post Office, and some suppliers, according to documents seen by The Guardian.
Landlord Support and Opposition
More than 80% of landlords controlling TG Jones' top stores voted in favor of the deal this week. However, the majority of other classes of landlords, who face significant rental cuts under the plan, voted against it. Several different classes of creditors voted over two days on the restructuring, but the plan only requires approval from one class of creditor and a High Court judge to proceed.
Creditor Votes
Only 72% of business rates creditors, mostly local councils, backed the plan. Less than a third of general creditors, including card makers and pen brands, approved it. No landlords owning unwanted stores, where rent will be cut to zero or stores closed, supported the plan.
Small suppliers are expected to lose at least half of the money owed to them by the former WH Smith high street chain if the restructure is approved. Two hearings related to the two companies that make up TG Jones are scheduled: one on Monday and one on Tuesday.
Company Background
The retailer, which operates 450 stores, was purchased by private equity firm Modella Capital last year and rebranded as TG Jones. The company has stated that it will likely have to call in administrators if the restructuring plan is not approved.
Impact on Suppliers
Dozens of 'exit contract' suppliers, including toy makers and greetings card companies that TG Jones does not wish to work with in the future, could have their debts wiped out if the proposal is approved. However, they would retain the right to a share of any profits above a certain level from the loss-making retailer in three years' time.
