A restructuring plan for TG Jones, the retail company formerly operating as WH Smith, has been approved by the high court, paving the way for the closure of up to 150 stores and potentially placing thousands of jobs at risk. The decision was handed down by Mr Justice Hildyard on Wednesday, despite his reservations about the limited timeframe allowed to consider the proposal.

TG Jones, which has approximately 450 stores and employs around 5,000 people, was acquired last year by private equity firm Modella Capital and subsequently rebranded. The company had warned that failure to implement the restructuring plan could result in the need to enter administration.

The court was informed that the retailer was facing severe financial difficulties, including a projected cash shortfall nearing £8 million by the week’s end, affecting its ability to meet critical payments such as rent, employee wages, and taxes. Lawyers representing TG Jones described the firm’s financial position as “horrendous.”

The restructuring plan involves significant measures, including writing off supplier debts and substantial rent reductions for many landlords. While more than 80% of landlords controlling the company’s top-performing stores supported the deal, the majority of other landlord groups, who stand to lose from the rental cuts, opposed it. Among other creditor groups, only 72% of business rates creditors — mainly local councils — approved the plan, whereas less than a third of general creditors, including companies supplying products like cards and pens, supported the restructuring.

Under a “cram down” arrangement, the court can impose a restructuring plan on dissenting creditor groups if it secures at least 75% approval within one creditor class and judicial consent. Although not all creditor categories met this threshold, the court’s approval allows the plan to proceed.

Justice Hildyard expressed skepticism regarding the low valuation placed on TG Jones by its new owner. Modella Capital valued the business at no more than £3 million, a substantial reduction from the roughly £40 million acquisition price paid only a year prior. The judge described this steep decline in value as “difficult to swallow.”

Alex Willson, CEO of TG Jones, welcomed the court’s ruling, emphasizing that it enables the company to advance its turnaround strategy and strengthens the viability of the business. He also expressed gratitude to colleagues, partners, stakeholders, and Modella Capital for their support throughout the restructuring process.

Credit analysis expert Hossein Dabiri noted that court-sanctioned “cram down” restructurings have facilitated swifter and more assertive interventions in financially distressed retail businesses, particularly in renegotiations involving retail leases.

With the court’s approval, TG Jones will now move forward with its plan to reduce its physical store footprint and restructure its financial obligations in an effort to stabilize and sustain its operations.