TOFS has gone into administration with Interpath, being appointed administrator of the Burnley-based discount retailer as of today. 1200 jobs thought to be at risk.
Update 19th January 2026
TOFS has filed a second intention to appoint administrators. This is its last chance to find a buyer for the business. The moratorium lasts 10 days. After the moratorium expires and no buyer is found then the company will go into administration and most likely most of the stores will close.
The Original Factory Shop (TOFS), bought by Modella Capital just four weeks ago, is working with advisers at Interpath on a potential company voluntary arrangement, Sky News has reported.
Modella is looking at a CVA in order to close underperforming businesses and impose rent reductions on others.
Potential reorganisation suggestions are also believed to include a significant distribution centre.
It is understood that the creditors will meet to vote on the proposal in Mid May. It is hoping that 88 stores will get rent reductions.
There will undoubtedly be some job losses among TOFS’s employees, which was estimated to be around 1,800 at the time of last month’s takeover, if any so-called “landlord-led” CVA caused store closures.
A CVA allows the company to terminate its liabilities under a lease provided that the majority of creditors by value (75%) agree. Landlords who do not have large arrears or rent owed to them are permitted in law to vote to the value of only 12 months rent. In the majority of cases, landlords make up a small proportion of the total debts so they are routinely out voted by suppliers, HMRC etc.
This explains why many retailers use this as a way of reducing rental costs as they can make up a high proportion of the companies costs but not their liabilities. So in other words they can get rid of loss making stores and not be on the hook for the 5 year lease. By applying pressure on landlords, by threatening a CVA, they can get rent reductions on premises that might otherwise have to close.
TOFS, which sells beauty brands such as L’Oreal, the sportswear label Adidas and DIY tools made by Black & Decker, has about 180 outlets.
We will keep this page updated once we know more.
As TOFS enters formal insolvency, stakeholders often face significant uncertainty. Here is a breakdown of the legal framework and what it means for those affected.
Administration is a powerful statutory process governed by the Insolvency Act 1986. It is triggered when a company is insolvent and can no longer meet its debts. An independent Licensed Insolvency Practitioner (IP) is appointed to take control from the directors. A key feature is the statutory moratorium—a legal “shield” that instantly stops all legal actions, such as winding-up petitions or bailiff visits, providing the “breathing space” needed to rescue the business or achieve a better result for creditors than immediate closure.
The law dictates a strict hierarchy for the distribution of funds. Fixed charge holders (typically banks with security over property) are paid first. Once the administrator’s fees are covered, preferential creditors are next; this includes employees (for specific arrears) and HMRC for taxes like VAT and PAYE. Following these are floating charge holders, and finally, unsecured creditors—which include trade suppliers and customers—who are at the back of the queue and frequently receive only a small fraction of their debt.
Entering administration does not mean all jobs are instantly lost. For the first 14 days, the administrator assesses the company’s viability and may make redundancies. If a member of staff is kept on past this 14-day window, the administrator “adopts” their contract, meaning their ongoing wages and rights become a priority expense. Those made redundant can claim for unpaid wages and notice pay via the Redundancy Payments Service if the company has insufficient assets to cover these costs.
Suppliers and customers are generally unsecured creditors. Suppliers should stop granting credit under old agreements and negotiate “pro-forma” (upfront) terms for any new supply to the administrator. For customers, deposits and gift cards are rarely honoured. However, those who paid over £100 via credit card may be protected under Section 75 of the Consumer Credit Act and should contact their bank immediately to initiate a claim.
Written ByRobert Moore
Marketing Manager
Rob has over two decades of experience in web and general marketing. He has extensive knowledge of the Insolvency sector and has helped many worried directors with their questions.
Rob is now working with the Board at RMT to develop strategic marketing programmes to support the business plan and drive more company rescues.
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