Former WH Smith chain TG Jones to write off at least half of debts to small suppliers

Small suppliers of the former WH Smith high street chain, now rebranded as TG Jones, are set to lose at least half of the debts owed to them if a restructuring plan is approved this Wednesday. The chain, which operates 450 stores, was acquired by private equity firm Modella Capital last year for £76 million and rebranded.

The restructuring plan, seen by The Guardian, involves creditors including landlords voting on amendments designed to cut costs. TG Jones has warned it may need to call in administrators if the plan is not approved.

Under the proposal, "exit contract" suppliers – those TG Jones no longer wishes to work with, such as toy makers and greeting card companies – would have their debts completely wiped out. "Non-core" suppliers, including the veterans charity Help for Heroes, would receive less than half of what they are owed, with the remainder delayed for three and a half years.

One card maker, a long-standing supplier, described the situation as a "significant write-off" and said they would stop supplying TG Jones. Another supplier said they were "absolutely broken" by the potential loss of several thousand pounds, calling it a hard blow to their family.

Major suppliers like Condé Nast, Ferrero, and Lonely Planet will also face losses: their debts will not be repaid in full for a year, with monthly instalments starting only six months after approval.

Modella has launched an aggressive restructuring plan that could close up to 150 stores and cut rents on dozens more. The firm says it is essential for turnaround and involves a £35 million investment.

Landlord British Land initially opposed the plan, calling it a "wholly unfair allocation of burdens" and a "naked transfer of value" to Modella. However, after TG Jones offered improved terms, including a share of future profits and rent repayment guarantees, British Land withdrew its opposition and will abstain from voting. A TG Jones spokesperson said the company has engaged constructively with landlords and improved the plan based on feedback.