The new owner of WH Smith's high street chain has been effectively barred from launching mass store closures for at least 12 months.
Modella Capital, which acquired the business in March, would risk cancellation of a crucial transitional services agreement if it launched a company voluntary arrangement (CVA) before the first anniversary of the deal's completion.
This restriction is considered significant by retail insiders.
The transitional services agreement allows Modella to continue using WH Smith's systems after taking ownership.
In March, WH Smith agreed to sell its 480 high street shops to Modella in a £76m deal, ending 233 years of high street history
PAIn March, WH Smith agreed to sell its 480 high street shops to Modella in a £76m deal, ending 233 years of high street history.
Modella plans to rebrand the chain under the name TG Jones after it takes control.
The clause in the transitional services agreement effectively prevents Modella from implementing a CVA during the first year.
This comes as Modella has recently pursued restructuring plans at other retailers in its portfolio.
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Industry executives believe that over time, a sizeable part of the WH Smith high street estate could be at risk.
Sky News has revealed that Modella plans to launch CVAs at both Hobbycraft and The Original Factory Shop, which it has owned for nine and three months respectively.
These restructuring processes have put significant numbers of stores at risk.
A spokesman for Modella said: "We have a number of exciting plans for the future of TGJones. A CVA is not on the agenda, as it is a solvent business."
WH Smith, which will become a pure-play travel retailer once the deal completes, declined to comment further ahead of the sale's completion.
Industry executives believe that over time, a sizeable part of the WH Smith high street estate could be at risk
GETTYWH Smith Group CEO Carl Cowling previously described the sale as a pivotal moment for the company as it sharpens its focus on the booming travel retail sector.
He said: "As we continue to deliver on our strategic ambition to become the leading global travel retailer, this is a pivotal moment for WHSmith as we become a business exclusively focused on travel.
"While WHSmith’s high street division remains profitable and cash-generative, Cowling said the company’s rapid international growth made it the right time to hand over the high street arm to a new owner.
He continued: "High Street is a good business… However, given our rapid international growth, now is the right time for a new owner to take the high street business forward."
