The new owner of The Original Factory Shop (TOFS) is drawing up plans for a significant restructuring of the discount retailer shortly after taking control.

According to Sky News, Modella Capital - which is also bidding for WH Smith’s high street division - has appointed Interpath as advisers to evaluate restructuring options for TOFS, including a potential CVA.

Reportedly, restructuring could target underperforming stores with closures and rent reductions at other locations, and a major distribution centre may also be included in the restructuring proposals.

The plan appears to focus on addressing property costs rather than other creditor obligations. Any “landlord-led” CVA resulting in store closures would likely cause job losses among TOFS’ approximately 1,800 employees noted at the time of last month’s acquisition.

The timeline for implementing a CVA, which requires approval from both the court and creditors, remains unclear. TOFS operates around 180 stores selling products from well-known brands at reduced prices. 

Founded in 1969, the chain was purchased by private equity firm Duke Street in 2007, which had previously attempted to sell the business. Duke Street supported TOFS through the Covid pandemic with over £10 million in funding before selling the debt-free company to Modella Capital.

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