TG Jones ‘might fall into administration in two months until it closes 150 shops’ – as proprietor blames ‘pressured identify change’ from WH Smiths for ailing commerce
TG Jones could fall into administration by the end of July if restructuring plans involving the closure of 150 stores are not approved, its lenders have been warned.
On Wednesday, Modella Capital – the new private-equity owners of the rebranded WH Smith shops – outlined their plan to rescue the ailing business to the company’s creditors.
The proposals include Modella injecting £35million worth of funding into the business while slimming down the chain, with up to 150 of its 480 stores set to shut and staff to be made redundant.
The plans also include landlords of the stores accepting long-term rent holidays or steep rent cuts – or face the business going bankrupt.
It is understood that the new proposals say the business faces being put into administration if the plan has not been enacted by July 31.
Earlier this week, a spokesperson for TG Jones said the decision to launch an overhaul had ‘not been taken lightly,’ but that it was an ‘essential’ part of the company’s turnaround.
However, the company blamed the retailer’s ‘forced name change’ from WH Smith as negatively impacting the public’s awareness of the brand, as well as the challenging business climate on the Chancellor, Rachel Reeves.
WH Smith’s sales struggled for years before Modella bought its high-street arm last year for £40million and rebranded as TG Jones.
TG Jones (pictured) could fall into administration by the end of July if restructuring plans involving the closure of 150 stores is not approved
The threat of TG Jones’s administration comes as Modella has bought numerous distressed retailers over the last 18 months with varying success rates.
TG Jones is the third high street chain it bought that has run into serious financial trouble.
It had planned to expand WH Smith’s retail operation to more than 500 stores while opening hundreds of Toys R US and Hobbycraft concessions.
It also attempted to revitalise The Original Factory Shop and Claire’s Accessories – but both retailers were put into administration earlier this year.
It was just months after Modella took them over and nearly 2,500 people lost their jobs as a result.
TG Jones’s new restructuring plan must win the vote of three quarters of creditors and landlords to be implemented.
However, the High Court could push the deal through if administration is the alternative.
The plan will be heard in court on June 29, after which it could take effect.
