Former WH Smith’s small suppliers to lose at least half of debts in rescue plan

WH Smith was bought by the private equity firm Modella Capital last year and rebranded TG Jones. Photograph: Antonio Olmos/The Guardian View image in fullscreen WH Smith was bought by the private equity firm Modella Capital last year and rebranded TG Jones. Photograph: Antonio Olmos/The Guardian Former WH Smith’s small suppliers to lose at least half of debts in rescue plan If TG Jones’s aggressive restructuring is voted through, the charity Help for Heroes and other creditors will be out of pocket Small suppliers including the charity Help for Heroes are to lose at least half 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. It has said it is likely that it will have to call in administrators if creditors, including shop landlords, do not approve an amended restructuring plan, seen by the Guardian, designed to cut costs in a vote on Wednesday. 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. They would retain the right to a share of any profits over a certain level from the retailer – which is now loss-making – in three years’ time. Shoppers splash out on fans and paddling pools as retail sales in Great Britain hot up Read more Under the plan, 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. One card maker, a long-established supplier to the high street retailer, told the Guardian: “For our business it is a significant write-off.” She said the company had lost out not just on money owed for cards sold but on stock provided on a “sale or return” basis that had been left in stores that are now poised to close. She intends to stop supplying TG Jones. Another supplier said they were “absolutely broken” by the potential write-off of several thousand pounds, which was “going to hit my family hard [from] which I won’t be able to recover”. “This was my main account, being small-scale,” they said. Help for Heroes declined to comment but on its website it said that, since partnering with TG Jones’s former owner, WH Smith, in 2014, the retailer had raised more than £71,000 through the sale of Christmas cards with veteran-inspired designs. The pain for small suppliers comes as TG Jones asks all its suppliers – even large-scale businesses providing products and services it wishes to continue using as “core suppliers” – to take a hit. Companies, including household names such as Condé Nast, the magazine publisher, Ferrero, the chocolate manufacturer, and Lonely Planet, the guidebook group, will not be