The former WH Smith high street business is reportedly pursuing a restructuring plan to avoid insolvency
Recent reporting indicates that TG Jones, the former WH Smith high street business, is pursuing a restructuring plan under Part 26A of the Companies Act 2006 in an effort to avoid a potential insolvency process later this year.
According to the reporting, the proposed restructuring is expected to involve lease negotiations, store closures and compromises affecting certain creditor groups, particularly landlords.
While the restructuring remains subject to the formal court process and creditor approval stages, the case reflects a broader trend that has developed across the retail and hospitality sectors in recent years. Businesses facing sustained cost pressures, changing consumer behaviour and significant property liabilities are increasingly turning to restructuring plans as an alternative to administration or liquidation.
The case is also another reminder of how insolvency law in England & Wales has evolved to give distressed companies more flexible rescue options before formal collapse becomes unavoidable.
What is a Part 26A restructuring plan?
A restructuring plan is a court-supervised rescue process introduced under the Corporate Insolvency and Governance Act 2020 through Part 26A of the Companies Act 2006.
The procedure was designed to help businesses experiencing financial difficulty restructure liabilities while continuing to trade.
- Unlike traditional insolvency procedures, a restructuring plan does not necessarily involve administrators taking control of the company.
- Instead, the existing business management often remains in place while creditors vote on proposed compromises or arrangements.
One of the most significant features of the restructuring plan regime is the ability to use what is commonly called a cross-class cram down. This allows the court, in certain circumstances, to approve a restructuring plan even where one or more creditor classes vote against it.
That power has made restructuring plans particularly attractive in sectors such as retail and hospitality, where landlords, lenders and trade creditors may have competing interests and differing views regarding the future viability of the business.
FWJ regularly advises businesses, directors and creditors involved in restructuring, rescue and insolvency situations.
Why are retailers increasingly using restructuring plans?
Many retailers continue to operate under significant pressure despite wider economic recovery in other sectors.
- Large property portfolios, rising operational costs, changing consumer habits and reduced footfall have left many businesses struggling to maintain profitability across all locations.
- For businesses with substantial lease obligations, restructuring plans can provide an opportunity to renegotiate rental liabilities, close underperforming sites and stabilise cashflow without entering immediate administration.
- That can sometimes preserve jobs, maintain supplier relationships and allow viable parts of the business to continue trading.
At the same time, restructuring plans inevitably create tension between different creditor groups. Landlords may face reduced rents or lease compromises, while lenders and suppliers may also be asked to accept revised repayment terms.
The court’s role is therefore central to the process. Judges must consider whether the restructuring is fair and whether dissenting creditor classes would be worse off under the proposed plan than they would be in the likely alternative scenario, which is often administration or liquidation.
How does a restructuring plan differ from administration?
Administration and restructuring plans both aim to preserve value and avoid unnecessary business collapse, but they operate differently.
- Administration is a formal insolvency procedure in which licensed insolvency practitioners take control of the company. Their role is to rescue the company where possible or otherwise achieve a better outcome for creditors than immediate liquidation.
- A restructuring plan, by contrast, is usually designed to avoid formal insolvency altogether. Directors often remain involved in running the business while negotiations with creditors continue under court supervision.
For some businesses, a restructuring plan may provide greater flexibility and reduce the reputational damage associated with administration. However, the process can also be complex, expensive and heavily contested where creditor interests diverge significantly.
Why are landlord disputes becoming central to retail restructurings?
One of the defining features of modern retail restructuring has been the increasing focus on commercial property liabilities.
Many retailers continue to occupy large estates negotiated during very different economic conditions. As trading models change, businesses may seek to reduce rental exposure by closing stores, renegotiating leases or restructuring future payment obligations.
That inevitably places landlords in a difficult position. Property owners may resist proposals that reduce rental income or alter lease rights, particularly where multiple tenants across the sector are seeking similar concessions.
As a result, restructuring plans frequently involve detailed negotiations concerning lease categorisation, voting classes and the fairness of proposed compromises.
Commercial property disputes and insolvency restructuring issues are therefore becoming increasingly interconnected within the retail sector. FWJ advises landlords, businesses and directors involved in commercial property disputes and restructuring negotiations.
What practical lessons emerge from cases like this?
The continued use of restructuring plans demonstrates that businesses now have more options available before formal insolvency becomes unavoidable.
- For directors, early engagement with financial difficulties is often critical. Waiting until liquidity pressure becomes unmanageable can significantly reduce restructuring options later.
- For landlords and creditors, understanding how restructuring plans operate has also become increasingly important. The process can materially affect enforcement rights, future recoveries and negotiating leverage.
The wider retail sector is likely to see continued use of restructuring plans where businesses seek to reduce liabilities while preserving viable trading operations.
