Modella Capital has told creditors to back its restructuring proposals or risk the business collapsing into insolvency by the end of July, according to restructuring plans seen by Retail Week.
The restructuring proposals said short-term cash-flow modelling conducted by Modella in light of its declining trading performance shows that TGJones will need a further £17.8m in funding by the end of the week commencing June 29, increasing to £26.3m in funding by the week commencing August 3, to stay afloat.
In April, Modella was able to free up £45m of new funding for TGJones, including a £10m loan with itself as the creditor and a further £35m from investment group Aurelius.
However, Modella said if its restructuring plans are delayed beyond June 29, it would be at risk of defaulting on repayments on its loan from Aurelius − which previously extended a £12m loan to The Original Factory Shop after its acquisition by Modella.
Modella warned creditors that should the TGJones restructuring proposals not be in place by July 31, it would “not provide further funding [to the business] beyond the £10m” it has already put in.
As a result, Modella said if the restructuring plan is not waved through by the end of July, it is “very likely” that TGJones will “enter a formal insolvency process”.
The restructuring proposals are scheduled to be heard by the High Court on June 29.
The plans also said: “In recent weeks, the business has started to receive a significant number of demand letters and summonses as a result of the non-payment of business rates arrears.” This follows an April decision to defer paying £3.4m in business rates.
“Without funding to pay these outstanding business rates, or the compromise of these amounts through financial restructuring, the business is at risk of local authorities seeking to take enforcement action such as the appointment of enforcement agents to seize goods or attempts to wind up,” the docment said.
It comes after it was widely reported yesterday that Modella’s restructuring plan for TGJones involved the shuttering of up to 150 branches and hundreds of job losses across the business.
No comments yet