Trouble at Toys R Us is leading to a potential collapse this week with the loss of 3,200 jobs.
The news comes after Pension Protection Fund (PPF) told the toy group to put £9 million into its struggling pension fund. Toys R Us must come up with the £9 million by Thursday for the PPF to agree to the group’s restructuring plan.
‘‘We are seeking to fully understand the current position of the company, including its future potential, position of the US parent and the reported historic financial transactions,” said Malcolm Weir, director of restructuring and insolvency at the PPF.
“The pension scheme is already underfunded and, if we were to vote in favour of the CVA, we would need actions taken that ensure the position of the pension scheme was not going to further weaken.
“Whatever the outcome of the CVA, the pension scheme members can be reassured that they remain protected.”
Toys R Us needs support from the PPF for the planned company voluntary arrangement (CVA) procedure. This will lead to the closure of at least 26 loss-making stores and 800 jobs.
If the CVA is not supported, the company will most likely go into administration. The administration will lead to the closure of all 84 stores in the UK and put 3, the 200 UK staff at risk of redundancy.
All Toys R Us stores will continue to trade during the Christmas period, however, if the CVA is approved, the stores affected will start closing from spring 2018.
“There will be no disruption for customers shopping through the Christmas and New Year period,” the company reassured shoppers.
Toy industry expert Peter Jenkinson told BBC 5 live Breakfast:”Toys R Us does suffer because it has some very big stores in prime locations and the rent has gone up.”
“Its in-store activity has been found wanting a little bit compared with other toy retailers and it has fallen behind. However, if the restructuring goes through then some of its stores could thrive. There are stores I’ve been into over the last month that have really started to up their game.”