Toys R Us faces collapse, seeks support of PPF for planned restructure
20 Dec 2017
Toys R Us UK could collapse this week with the loss of 3,200 jobs as it struggles to win the support of the state-backed Pension Protection Fund (PPF) for a planned restructure.
PPF, the industry-funded, state-backed safety net, has asked the troubled retailer to infuse about £9 million into the ailing Toys R Us UK pension fund.
The measure would help win the PPF's support for the retailer's planned company voluntary arrangement (CVA) procedure, which would see at least 26 loss-making stores close. The deal would bring the axe down on 800 jobs.
The insolvency procedure would subject Toys R Us' pension fund to assessment by the PPF, giving it a key vote at the meeting and the potential to block the process.
In the event the CVA were not to go ahead, according to sources close to the company, it was likely to fall into administration with the potential closure of all 84 permanent stores and about 20 more pop-ups, putting all 3,200 UK staff at risk of redundancy.
The company's latest set of accounts filed at Companies House show a pension deficit of £18.4 million in January, up from £10.25 million a year before.
Meanwhile, The Telegraph reports that the PPF is demanding the funds within two months in a bid to secure the future of the pension scheme if Toys R Us's rescue plan were to fail. The amount is equal to that which would be put into the pension scheme over the next three years.
The PPF, whose vote was likely to determine whether or not the plan would go-ahead, would need to formally lodge papers on its decision by midday tomorrow. The vote is scheduled for Thursday.
Toys R Us requires support from 75 per cent of its creditors, including landlords, for the CVA, which was first reported by Sky News.
