The high street chain formerly known as WH Smith is facing an £8 million shortfall by the end of the week unless a restructuring plan is approved, the High Court has been told.
TG Jones, which has stores in Colchester, Brentwood, Southend, Basildon and Braintree, is seeking court approval for the plan to save itself from insolvency.
If given the go-ahead, the plan would mean an extra £15 million loan from the company’s owners Modella Capital, on top of £10 million loaned in April, and reduced rates of rent for landlords.
Tom Smith KC, for TG Jones, told a hearing on Monday that the business is “highly distressed” after suffering “long-term sales decline”.
He said that paying tax, rent, suppliers and payroll this week would leave the company with an £8 million shortfall.
In written submissions, he said: “As is well known, the UK retail sector has faced serious trading difficulties in recent years.
“The problems facing the sector have their roots in macroeconomic factors such as high inflation, the shift to online shopping, reduced consumer spending, higher labour costs and increased taxes.”
The chain of high street shops was renamed to TG Jones last year after being bought by Modella, while WH Smith kept its group of stores in travel locations like airports and train stations.
There are around 450 TG Jones stores with 4,700 staff, mostly in the UK.
Mr Smith said that the “working assumption” is that around 150 of these will close as a result of the plan, as landlords who do not wish to accept the reduced rate can choose to terminate the lease.
He said: “That will assist in ensuring the future of the group.”
Ben Shaw KC, for the group of landlords, said the rentiers are not opposed to the plan following recent negotiations over the deferral of rent payments in the first year of the plan.
Mr Justice Hildyard is expected to give a decision on Wednesday.
