Former WH Smith Suppliers Face Major Debt Losses in Restructure Plan

AI Summary

Small suppliers to former WH Smith chain face losing at least half of debts owed in restructure plan. The plan, which affects dozens of suppliers, including charity Help for Heroes, aims to cut costs but may lead to significant financial losses for those involved.

The Impact on Small Suppliers

Small suppliers, including the charity Help for Heroes, are expected to lose at least half of the money owed to them by the former WH Smith high street chain if a planned restructure is voted through this week. The books to paperclips retailer, which has 450 stores, was bought by the private equity firm Modella Capital last year and rebranded TG Jones.

The Restructure Plan Details

Under the plan, dozens of 'exit contract' suppliers, which TG Jones does not wish to work with in future, including toy makers and greetings card companies, are expected to have debts owed to them by the retailer wiped out if the proposal is approved. Other suppliers listed by the retail group as 'non-core' – including the veterans charity Help for Heroes – will receive less than half the money they are owed, with the rest not paid in full for three and a half years.

The Financial Impact

TG Jones owes suppliers £4m.
Modella has said the plan is an 'essential part of the company’s turnaround' under which it will invest £35m.

The Future Outlook

Modella sent landlords an amendment to the restructuring plan offering improved terms, including a bigger share of any 'upside' in future profits resulting from the restructure, in order to try to win their backing. British Land, a leading landlord, had tried to delay the vote on the plan with legal action but has since withdrawn its opposition and will abstain from voting.