Toys R Us UK Stores Facing Administration

Posted on 20 December, 2017 by Bailey Clarke

Toys R Us a leading toy retailer for many years could fall into administration before Christmas due to a demand to put £9 million into Toys R Us UK pension fund. The toy store giant is said to not have the resources to pay up such a demand, which has the potential to put it in a critical business situation. 

market cart and supermarket view and parking

This is not the first bad news to hit the toy retailing giant in recent times. It was only earlier this month that news broke out with Toys R Us announcing it was looking to close 26 UK stores which would be affecting 800 jobs.  

This plan was part of a Company Voluntary Agreement (CVA) which allows the company to restructure its finances. This is a desperate move to gain the support of the Pension Protection Fund (PPF) although it now has to agree on the restructuring plan. If Toys R Us fail to gain the support of the PPF this could see the company to fall into administration, which in turn would affect all its 3,200 staff with potential redundancy.  

In a best-case scenario, if the CVA is approved, the affected 26 stores would begin to close in the spring of 2018. It is said that all Toys R Us stores will continue to trade throughout Christmas.  

Malcolm Weir who is the director of restructuring and insolvency at the PPF has said “whatever the outcome of the CVA, the pension scheme members can be reassured that they remain protected”.  

Additionally, there have also been concerns raised about a write-off of £584.5m in loans owed by a Toys R Us firm based in the British Virgin Islands as part of a group reorganisation last year and what kind of impact this could have on the pension scheme. It was also reported just a few months back Toys R Us US’s parent company in America is also going into administration with the potential to close up to 200 stores across the USA. 

Even a best-case scenario for the former toy giant would still be seeing 800 employees being made redundant within the first quarter of 2018.

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