The former WHSmith (SMWH) high street arm, now trading as TG Jones, is facing mounting pressure as a proposed rescue plan heads towards a decisive court ruling, with up to 150 stores at risk of closure and a further 120 expected to stop paying rent for three years.
Shares in WHSmith fell 4.7% on Friday as investors reacted to the growing threat to its £32m in contingent sale proceeds, driven by fallout from the high street spin-off’s escalating financial crisis.
The restructuring proposal, drawn up under owner Modella Capital, is designed to steady the business through a three-year turnaround, but it has triggered strong opposition from creditors and landlords who argue the measures shift too much of the burden onto property owners while offering limited visibility on long-term stability.
If approved by a judge next month, TG Jones would shut 150 branches across the UK and suspend rent payments on 120 additional sites, including some that landlords insist remain profitable, however if the plan is rejected the retailer could be pushed into administration according to reports.
Creditors have raised concerns over the financial structure supporting the proposal, pointing to a loan arranged at around 12% above base rate which they describe as excessive given the circumstances, while also questioning the decision to pay for use of the TG Jones brand under a licensing arrangement they argue adds unnecessary cost to a strained balance sheet.
One creditor told Sky News that the revised profit-share mechanism still assumes the business will generate enough cash in three years to meet obligations while continuing to service debt, a scenario they believe remains uncertain given current trading conditions.
Landlords have also escalated their criticism, with executives arguing that rent reductions on properties deemed viable effectively transfer financial strain onto property owners without adequate compensation, while also highlighting a lack of clarity around planned store refits intended to improve performance.
Among the most vocal opponents is British Land, which has labelled the restructuring proposal fundamentally unfair and has signalled continued resistance even after revisions were made, while other major landlords including M&G and Land Securities have also reportedly lodged objections.
British Land argues that the plan places disproportionate pressure on landlords while offering no equity contribution from shareholders who stand to benefit if the turnaround succeeds, a point echoed across parts of the property sector where confidence in the proposal remains low.
A TG Jones spokesperson said the company has engaged with creditors and landlords throughout the process and has already adjusted elements of the plan following feedback, adding that the revisions are intended to support a fair outcome across stakeholders and improve the chances of long-term stability.
A person close to Modella said the brand licensing arrangement does not involve cash payments but is instead an accounting mechanism, a detail intended to address criticism over the cost of operating under the TG Jones name.
The impending court decision leaves the future of the prominent high street brand hanging in the balance. A ruling next month will either force aggrieved landlords to accept a painful, three-year financial hit, or deny the plan entirely—a move almost certain to tip the retailer into administration.