TG Jones has won High Court approval for a restructuring plan that will allow the former WH Smith high street business to proceed with a rescue package that could close up to 150 stores, after a judge ruled on Wednesday that the deal offered creditors a better outcome than administration.

The retailer, acquired by Modella Capital last year and rebranded as TG Jones, had warned it was on the brink of insolvency without court approval. The business, which operates 451 stores and employs about 4,700 people, told the court it faced a cash shortfall of almost £8 million by the end of the week after relying on a £10 million shareholder loan and deferred liabilities to continue trading.

According to court proceedings, the restructuring will reduce lease liabilities, cut rents across much of the estate and unlock funding for a turnaround strategy. The plan is expected to leave the business with about 302 stores, depending on whether landlords choose to terminate leases rather than accept reduced rents.

Alex Willson, chief executive of TG Jones, said: “We welcome the court’s approval of our restructuring plan. This decision allows us to move ahead with our turnaround strategy.” He added that the plan “protects the substantial core of the store estate and makes TG Jones a stronger, more sustainable business”.

The proposal initially faced strong resistance from landlords, led by British Land-linked creditors, who argued that the rent reductions were unfair. Revised terms offered during the court process persuaded six British Land-associated landlords to withdraw their opposition, with landlords securing a greater share of potential future profits and the deferral, rather than complete write-off, of some rent arrears backed by security.

Mr Justice Hildyard approved the plan but criticised the compressed timetable imposed on the court. In his judgment, he described the restructuring as “complex in their terms and far-reaching in their effect” and concluded it represented “the lesser of two evils” given the retailer's financial position, while warning that restructuring processes work better when companies seek help before liquidity problems become critical.

Hossein Dabiri, restructuring expert at Debtwire, said: “The High Court’s approval of the TG Jones restructuring plan reinforces how important Part 26A plans have become for companies with large leasehold liabilities.” He added that the case showed creditors still retained leverage, despite the growing use of court-approved cross-class cram down restructurings.

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