Major British high street chain faces bailiff threat over unpaid taxes with 'job losses anticipated'

TG Jones faces the threat of bailiff action over £3.4million in unpaid business rates as the retailer behind hundreds of former WH Smith stores warned it could run out of cash within weeks.

Private equity owner Modella acknowledged receiving multiple demand letters and court summonses from local councils in recent weeks over the unpaid bills.

The firm warned that local authorities could pursue enforcement action, including seizing goods or filing winding-up petitions, if the arrears are not resolved.

Modella also cautioned that TG Jones is expected to exhaust its cash reserves by the end of June unless landlords agree to major rent reductions or extended payment holidays.

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The financial crisis emerged in documents released last week as part of a sweeping restructuring proposal affecting the chain’s 450-store estate.

Alongside the business rates arrears, TG Jones is carrying a further £4million in debts to suppliers and £8.4million in outstanding tax liabilities owed to HMRC.

Modella stated: "In recent weeks, the business has started to receive a significant number of demand letters and summonses as a result of the non-payment of business rates arrears.

"Without funding to pay these outstanding business rates or the compromise of these amounts, the business is at risk of local authorities seeking to take enforcement action."

Under the restructuring plans, landlords at more than 120 stores would receive no rent for three years, while hundreds of other sites would see payments reduced by between 15 and 75 per cent.

Modella blamed the retailer’s struggles on rising taxation and the mandatory rebranding away from the WH Smith name following the acquisition.

The private equity firm said it had been prohibited from continuing to use the WH Smith brand after the takeover.

Justin Madders, former employment minister and member of the business and trade select committee, criticised the arrangement and said taxpayers risked carrying the burden.

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Mr Madders told The Telegraph: "To many people, this will look like heads the investors win, tails the taxpayer loses.

"If workers lose jobs, councils lose revenue and the public is left carrying the cost."

The Labour MP also criticised Modella’s practice of charging TG Jones licensing fees linked to the newly created brand name.

He added: "What sticks in the craw is that while councils are left chasing unpaid business rates and HMRC is giving breathing space over millions in deferred tax liabilities, the company’s own restructuring documents show millions accruing in licensing fees payable within the wider ownership structure for use of the newly created TG Jones brand name."

Landlords reacted angrily to the 214-page restructuring proposal circulated by Modella.

One property owner said they were "really p----d off with Modella", adding that the company had "bought the business and rebranded it with a name that’s lost all the goodwill that went with it".

Another landlord warned that some property owners could attempt to reclaim stores and secure alternative tenants instead.

Stephen Springham, a retail analyst at Knight Frank, rejected suggestions that wider retail conditions were responsible for the retailer’s difficulties.

Mr Springham said books and stationery had been among the strongest-performing retail categories over the past year.

He said: "It’s absolutely scandalous."

Mr Springham also compared the situation to the collapse of BHS, describing it as "probably the worst example we’ve ever seen of private equity sucking the soul out of the high street".

Chief executive Alex Willson told staff the company expects up to 150 stores to close as part of the restructuring process, with job losses also anticipated.

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