A major high street chain has been given a dire warning that it risks shuttering 150 stores amid a shortfall of £8 million. TG Jones, formerly WH Smith, is seeking court approval for a restructuring plan to avoid insolvency.
If given the go-ahead, the plan would mean an extra £15 million loan from the company’s owners Modella Capital, on top of a £10 million loan in April, and reduced rates of rent for landlords. The chain of high street shops was renamed to TG Jones last year after being bought by Modella, while WH Smith kept its group of stores in travel locations.
Tom Smith KC, for TG Jones, told a hearing on Monday that the business is “highly distressed” after suffering “long-term sales decline”.
He said the “working assumption” is that around 150 of these will close as a result of the plan, as landlords who do not wish to accept the reduced rate can choose to terminate the lease.
Mr Smith added that paying tax, rent, suppliers and payroll this week would leave the company with an £8 million shortfall.
“The problems facing the sector have their roots in macroeconomic factors such as high inflation, the shift to online shopping, reduced consumer spending, higher labour costs and increased taxes.”
Ben Shaw KC, for the group of landlords, said the rentiers are not opposed to the plan following recent negotiations over the deferral of rent payments in the first year of the plan.
Mr Justice Hildyard is expected to give a decision on Wednesday.