How much of a retail turnaround should landlords fund, and how much of the upside should the owner keep? On 5 August 2026 Mr Justice Hildyard gave his full reasons for sanctioning two restructuring plans for the former WH Smith high street chain. In TG Jones High Street Limited, Re [2026] EWHC 2079 (Ch), he explained why he crammed down eleven non-approving classes, and what the court needs from plan timetables.
What the case was about
Modella Capital acquired WH Smith’s high street business in 2025 and rebranded it TG Jones, the WH Smith name staying with the travel business (paras 3, 4). The plan companies had been incurring significant losses over a considerable period (para 9) and were forecast to run out of cash in April 2026, surviving by, amongst other things, deferring liabilities including an £8.4m HMRC time-to-pay arrangement, and £10m drawn under a Modella facility (paras 11, 12). The relevant alternative was insolvent administration (paras 15, 98).
Landlord classes were constituted by store economics — the rent cut needed to make a store contribute positively to EBITDA and, usually, its refurbishment cost — not by the landlords’ legal rights (para 101). One class of HSL creditors and ten of RHL creditors did not approve the plans by the statutory majority, so cross-class cram down under Part 26A was required (para 92). The British Land landlords objected that landlords would fund most of the turnaround through rent cuts while taking no more than 3% of the upside, against Modella’s 97% (para 165). They then negotiated modifications (paras 86–89), moved to a neutral position (para 167), and asked for this fuller judgment (para 2).
What the High Court decided
He applied the Court of Appeal trilogy of Adler, Thames Water and Petrofac: statutory compliance and no “blot”; fair representation and coercion in the assenting classes; and, for dissenting classes, the “no worse off” test, a class with a genuine economic interest, then a more demanding inquiry into fair distribution (para 95). Classifying landlords that way is “an oddness”, but a “well-trodden approach” following Virgin Active, Poundland and Poundstretcher, from which he saw no sufficient reason to depart (para 102).
Differential treatment between landlord classes was justified by the differing importance of the sites (paras 173, 174). Contributions are valued by estimated recovery in the relevant alternative, new money at face value — his approach in Poundstretcher (paras 180, 181). Modella’s retention of equity was justified by its very significant contributions, undertakings on the use of profits and a ban on shareholder distributions during the rent concession period (para 190). Landlord plans “explore the outer reaches of a potentially draconian jurisdiction” and must be considered carefully lest Part 26A become an “engine of abuse”, but lingering discomfort is not a reason to refuse sanction (paras 192, 193). The plans were sanctioned, orders having been made on 1 July 2026 (para 214).
On the argument that deferred rent should count as new money, the judge did not consider the point decisive and was reluctant to give wider guidance; saying so “with diffidence”, he preferred the plan companies’ case that compromising a right of greatly diminished value in the relevant alternative is not to be equated with advancing new money on market terms (para 207). Objections from St Albans City and District Council, including loss to the public purse, did not outweigh the consequences of the relevant alternative (paras 196–198).
Why it matters
- Deferred rent was not equated with new money — tentatively. The judge preferred that view on narrow facts, relying on Lazari Properties, but declined to lay down wider guidance (para 207).
- Store-economics landlord classes survive again. Classifying by EBITDA contribution and refurbishment cost rather than legal rights remains “an oddness”, but is now well-trodden (paras 101, 102).
- Equity retention was the price of support here. Undertakings on how profits are applied, and a distribution ban, helped show no windfall to the shareholder (para 190).
- Build court time into the timetable. An expectation of an immediate decision is misplaced in complex plans, and in most cram-down cases; a Practice Statement may follow (paras 222, 225).
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Read the full judgment: TG Jones High Street Limited, Re [2026] EWHC 2079 (Ch) (The National Archives).