The potential collapse of two major high street chains, Claire's Accessories and The Original Factory Shop, has thrust the previously low-profile investment firm Modella Capital into the public eye. The move puts approximately 2,550 jobs at risk across the UK and Ireland.
The Rise of a Restructuring Specialist
Founded just four years ago by a group of restructuring professionals, UK-based Modella Capital has quickly built a significant portfolio. The firm has gained control of businesses operating roughly 900 shops and employing around 10,000 staff. It has positioned itself as a key player for medium-sized struggling retailers, filling a gap left by other investors.
In a short span, Modella has acquired several well-known names. It purchased 156 Claire's stores from administrators last year and took over The Original Factory Shop. More recently, in August 2024, it bought the arts and crafts retailer Hobbycraft. Last March, it agreed to buy the high street business of WH Smith, which has since been renamed TG Jones.
A Reputation for Hard-Nosed Turnarounds
Modella has developed a reputation for swift and tough restructuring strategies. A favoured tool is the company voluntary arrangement (CVA), an insolvency procedure used to renegotiate rents and close underperforming stores.
This approach was swiftly applied to Hobbycraft and The Original Factory Shop shortly after acquisition. Hobbycraft has closed 18 of its original 124 stores, leading to 600 job losses from an initial workforce of 2,400. The Original Factory Shop shut 41 stores and vacated its head office and distribution centre in Burnley.
The expected administration of Claire's and The Original Factory Shop, announced on a Monday, will likely see all their stores close—154 and 140 outlets respectively. Despite the rapid exit from Claire's, industry sources suggest Modella's wider group may have profited from the deal, including from stock clearance sales.
Behind the Scenes: The Hay Wain Group
Modella is part of the Hay Wain group, controlled by Jamie Constable, a former accountant and turnaround expert who co-founded Rcapital. The group's ecosystem includes stock clearance advisors Retail Realisation, credit fund Blazehill, and investment firm Quilam Capital.
Steve Curtis, a former WH Smith and Boots executive, chairs Modella and other entities within the group. Curtis has a history with troubled retail deals, having been involved with Paperchase, Tie Rack, and Feather & Black.
The group finances its ventures through a mix of its own funds and backing from specialist lenders like Secure Trust Bank and Aurelius, the former owner of The Body Shop. For The Original Factory Shop, Modella invested £3m on top of the purchase price.
Market Pressures and a Challenging Future
A spokesperson for Modella cited "very weak consumer confidence, highly adverse government fiscal policies and continued cost inflation" as reasons for the failures, stating neither chain had a realistic chance of trading profitably again.
For Claire's, the pressures are particularly acute. The retailer faces intense competition from online giants like Temu and Shein, as well as fast-fashion brands such as Zara and H&M, which also target teenagers with jewellery. One insider noted the profit margin on Claire's products could "no longer support the cost of physical retail."
Modella is expected to step away from Claire's completely, leaving the US brand owner, Ames Watson, to seek new UK licensees. This quick exit, alongside that of The Original Factory Shop, raises questions about the future of Modella's other acquisition, TG Jones (the former WH Smith high street business). While a deal prevents restructuring until summer, one industry insider warned: "After that, all bets are off."
While Modella's model is built on expert restructuring and stock clearance, some industry observers question its trading expertise. One restructuring expert commented: "I’m not sure they have got many people who understand the trading of businesses." Despite mixed returns on its investments so far, the firm continues to seek new retail deals in a highly challenging market.
