TG Jones, the retailer formerly known as WHSmith High Street, has warned that it faces insolvency unless creditors approve a restructuring plan later this month, highlighting the mounting pressures facing Britain’s bricks-and-mortar retail sector.
Alex Willson, who took over as chief executive in March, said the company had reached a critical point and would be unable to continue trading if the proposal fails to secure court approval.
“We just don’t have the cash to continue,” Mr Willson said, describing the restructuring as the business’s only realistic opportunity to remain operational.
The company, which employs around 5,000 people across approximately 450 stores, is seeking creditor support for a turnaround package that would involve the closure of as many as 150 outlets and significant rent reductions across much of its remaining estate.
The outcome of a court hearing scheduled for the end of June is expected to determine whether the retailer can proceed with the plan or faces a more severe insolvency process.
The restructuring has become the latest test of the balance of power between retailers, landlords and private equity owners as rising operating costs continue to squeeze margins across the sector.
To secure support, TG Jones and its owner, Modella Capital, have revised the terms offered to creditors. Under the updated proposal, landlords would receive 50 per cent of profits above £40 million generated over the next three years, substantially increasing their participation in any recovery.
The original proposal would have provided landlords with a significantly smaller share of earnings and only at higher profitability thresholds.
Modella has also pledged not to extract dividends while reduced rental agreements remain in place and has committed to reinvesting savings generated through the restructuring back into the business.
Nevertheless, opposition remains.
Property group British Land has criticised the proposals, arguing that profitable stores operating on market rents should not be subject to reductions and questioning why shareholders are being allowed to retain ownership without injecting fresh capital.
The dispute reflects broader tensions that have become increasingly common in UK retail restructurings, where landlords have frequently been asked to absorb losses while investors preserve equity positions.
Modella acquired WHSmith’s high street operations last year for an initial £10 million, with additional payments linked to future performance. Since then, the investment firm has pursued a strategy focused on operational restructuring across several retail businesses.
The company also owns Hobbycraft, Claire’s UK and The Original Factory Shop. Both Claire’s and The Original Factory Shop entered administration earlier this year, increasing scrutiny of Modella’s wider retail portfolio.
Mr Willson said TG Jones plans to improve performance through lower prices, simplified product ranges, store refurbishments and expanded partnerships with businesses including Toys R Us and the Post Office.
The retailer also estimates that recent government tax and employment measures have increased annual costs by approximately £11 million, adding further pressure to an already challenging trading environment.
The case is being closely watched across the retail sector as another indicator of the strain facing high street operators. While consumer spending has shown resilience in parts of the market, rising costs, changing shopping habits and weak economic growth continue to challenge traditional store-based retailers.
For TG Jones, however, the immediate issue is more fundamental.
Without creditor approval, management says the company may simply run out of cash.
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