_credit_Mtaylor848.jpg) |
|
| TG Jones at White Rose Centre, Leeds (photo: Mtaylor88) | |
A court has approved a restructuring plan that will allow Modella Capital to close up to 150 of the high street bookshops it bought from WH Smith last year, the Bookseller reported. The plan also includes the bookseller paying no rent to 120 landlords for up to the three years and major cuts in rent to other landlords. Modella renamed the stores TG Jones, and there are now 450 in operation, employing nearly 5,000 people.
TG Jones told the court that if the plan was not approved, it would have a cash shortfall of £8 million (about $10.6 million) by this week. Earlier this year it received a £10 million (about $13.3 million) loan from Modella.
Alex Willson, TG Jones CEO, said that the court approval "allows us to move ahead with our turnaround strategy. The plan protects the substantial core of the store estate and makes TG Jones a stronger, more sustainable business."
The Bookseller added that Modella attributed the problems "in part due to serious uninvestment by WH Smith, with long-term sales declining. It also blamed its poor trading on 'challenging retail conditions' and being unable to keep the brand name."
The Guardian quoted a Debtwire reporter who said that the approved plan is known as a "cram down" model that "allows courts, in certain circumstances, to impose a restructuring on dissenting classes of creditors [and] 'has made it easier for companies to pursue faster and more aggressive restructurings, particularly when renegotiating retail leases.' "
Various groups of creditors recently voted on the plan. More than 80% of landlords and less than a third of general creditors approved. Landlords that might receive no rent were against the plan. Small suppliers such as toy makers and greeting card companies will likely lose "at least half the money owed them."