Background
TG Jones High Street Limited and TG Jones Retail Holdings Limited operate the former WH Smith high-street business acquired by Modella Capital Limited in 2025. After years of losses, underinvestment in stores, weaker sales following the TG Jones rebranding, and severe liquidity pressure, the companies said they could not continue without urgent restructuring. Independent evidence identified the most likely alternative as trading administrations followed by accelerated stock liquidation and piecemeal asset sales.
The companies proposed parallel restructuring plans under Part 26A of the Companies Act 2006. The plans addressed secured debt, landlord liabilities, business rates, suppliers and other unsecured claims; rationalised the store estate; provided additional liquidity and extended financing maturities; and supported a three-year turnaround involving substantial capital expenditure. Eligible creditors would also receive 50% of cumulative EBITDA above £40 million for financial years 2027 through 2029, while Modella entities could not participate in that entitlement.
Some landlord classes opposed the plans, and St Albans City and District Council raised objections concerning fairness, its internal approval requirements, competitive effects and loss to the public purse. Negotiations with British Land landlords produced material modifications and the withdrawal of objections that the judge said might otherwise have tipped the balance against sanction.
The Court’s Holding
Mr Justice Hildyard sanctioned both plans, concluding after close review that they were not unfair and had a reasonable prospect of achieving their purpose. He accepted that failure of the plans would lead to an imminent, value-destructive administration and found the proposed allocation of restructuring burdens and benefits sufficiently coherent, balanced and proportionate to justify imposing the plans on dissenting classes. Modella’s retention of its equity was justified by its substantial contributions, including new financing and releases of claims, and by the need to preserve its incentive to support the turnaround.
The court rejected St Albans’ objections. A sanctioned plan takes effect by law notwithstanding the council’s internal constitutional requirements, and the asserted competitive and public-purse effects did not outweigh broader consequences of administration, including job losses.
The judge addressed, only tentatively and without treating the issue as determinative, an argument that the particular Rent Deferral Amount should be valued like new money. He considered the companies’ response stronger: compromising an existing right whose value would be greatly reduced in the relevant alternative was not equivalent to advancing new money on market terms. He expressly declined to give definitive guidance for other factual contexts.
Key Takeaways
- A court may sanction a complex landlord restructuring plan over dissent where the statutory requirements are met and a credible, balanced analysis shows that the plan fairly allocates its burdens and benefits.
- A shareholder’s retention of equity can be proportionate where its continued support and substantial new contributions are necessary to avoid a value-destructive insolvency, particularly when distributions are restricted and creditor upside-sharing is provided.
- The treatment of a specific rent-deferral contribution was not resolved as a general rule; the court’s observations were tentative, fact-specific and non-determinative.
- Applicants must build sufficient judicial consideration time into timetables for complex Part 26A cases, especially those seeking cross-class cramdown.
Why It Matters
The judgment illustrates the intensive fairness review required when Part 26A is used to compromise landlords and other dissenting creditors while existing shareholders retain their interests. The relevant alternative remains central, but the court cautioned that it does not automatically answer every concern about fairness or possible abuse.
The decision also sends a practical warning to restructuring professionals: commercial urgency does not make the court’s role ministerial. Complex plans must allow judges adequate time to examine valuation evidence, creditor treatment and the exercise of cross-class cramdown powers.