Ex-WHSmith stores owner in fight with landlords over ‘aggressive’ cuts

Major commercial landlords have launched a legal challenge against restructuring proposals put forward for TG Jones, the rebranded former WHSmith high street chain.

British Land is leading the opposition after instructing law firm Hogan Lovells to challenge the plans proposed by private equity firm Modella.

The property group has been joined by Landsec, M&G and NewRiver REIT in filing objections to the restructuring strategy.

Modella has warned the retailer could run out of cash by the end of this month unless property owners agree to significant concessions.

The dispute centres on proposals for major rent reductions and extended payment holidays across the chain's 451-store estate.

Under the restructuring plan, landlords for more than 120 stores would receive no rent payments for a three-year period.

Hundreds of other properties would face rent reductions ranging from 15 per cent to 75 per cent.

British Land formally lodged objections to the proposals, arguing the burden of the restructuring was being placed disproportionately on property owners.

One landlord executive told The Telegraph: "They have been so aggressive that the landlords feel there's no choice but to be aggressive back."

A British Land spokesman said: "The scale and structure of Modella's restructuring plan for TG Jones are unacceptable.

"As a creditor, we will not support proposals we consider fundamentally unfair, with deep rent cuts even on profitable stores placing a disproportionate share of the restructuring burden onto property owners."

During a court hearing this week, Mr Justice Smith said Modella must submit any amendments to the restructuring proposals to creditors by June 15 ahead of a High Court approval hearing scheduled for June 29.

Real Estate: UK, the commercial property trade body, welcomed the judge's intervention.

A spokesman for the organisation said: "Several landlord creditors affected by the restructuring plan's proposals are seeking to improve the plan and make it fairer to the affected parties.

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"We were pleased that the judge signalled an expectation that TG Jones should engage further with landlords and we hope and expect to see such engagement from the company as a result."

Landsec, M&G and NewRiver REIT declined to comment on the dispute.

TG Jones defended the restructuring proposals as necessary to secure the future of the business.

A company spokesman said: "The restructuring plan is vital to the survival of this 234-year-old business, along with the preservation of thousands of jobs."

The spokesman added that the retailer had engaged constructively with a limited number of concerned landlords and argued the proposals would leave creditors no worse off than alternative outcomes.

TG Jones also blamed some of its recent difficulties on what it described as a "forced name change" that had affected sales performance.

The company said savings generated from reduced rental costs during the first year would be reinvested into the business.

The proposals have also attracted criticism from politicians.

Justin Madders, the former employment minister and member of the business and trade select committee, previously said: "To many people, this will look like heads the investors win, tails the taxpayer loses."

Modella has previously overseen the insolvencies of Claire's Accessories and The Original Factory Shop.